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SAN FRANCISCO PUBUC USftASY 

REFERENCE BOOK 

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1 f&Y**^ 9^*\ City HaI1 

n Uh (£?[ M "t jS * 4 h \?~\ Dr - Carlton B - Goodlett Place, Room 244 

'// BOARD of SUPERVISORS "L'^P^Ib' I San Francisco 94102-4689 

7//.?/^ \&*§ i $^§mJ*'l Tel. No. 554-5184 

. 1 y^^^^^W^/ Fax No - 554 " 5163 

c^^'l^' \y^^^^Cy TDD/TTY No. 544-5227 



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NOTICE OF CANCELLED MEETINGS 

t FINANCE AND LABOR COMMITTEE 
SAN FRANCISCO BOARD OF SUPERVISORS 



NOTICE IS HEREBY GIVEN that the regular meetings of the Finance and Labor 
Committee scheduled foi the Wednesdays of July 5 and July 12, 2000, at 10:00 a.m., at 
1 Dr. Carlton B. Goodlett Place, Room 263, City Hall, San Francisco, California, have 
been cancelled. 



Gloria L. Young, Clerk of the Board 



DOCUMENTS DEP ' 
JUL - 3 2000 

SAN FRANCISCO 
PUBLIC LIBRARY 



Cancelled Meeting Notice/Ad 1/21/00 



FINANCE AND LABOR COMMITTEE 
S.F. BOARD OF SUPERVISORS 

CITY HALL, ROOM 244 

1 DR. CARLTON GOODLETT PLACE 

SAN FRANCISCO, CA 94102-4689 

IMPORTANT HEARING NOTICE!!! 



b.2$4 



IV DO 




[All Committees] 

City and County of $an Francisco M° ve !T ent Document Section 
J J ^ Main Library 

|Vleeting Minutes 
Finance and Labor Committee 

Members: Supervisors Leland Yee, Sue Merman, Tom Ammiano 
Clerk: Mary Red 



Wednesday, July 19, 2000 



10:00 AM 

Regular Meeting 



City Hall, Room 263 



Members Present: Leland Y. Yee, Sue Bierman, Tom Ammiano. 



Meeting Convened 

The meeting convened at 10:10 a.m. 

000855 [Authorizing the PTC General Manager to sign an agreement with BART to pay MUNI $2,175,648 for 
transferring riders to BART stations] 

Resolution approving an agreement between the City and County of San Francisco and the Bay Area Rapid 

Transit District authorizing payment to San Francisco Municipal Railway for transfer trips provided in fiscal 

year 1999-2000. (Public Transportation Commission) 

5/4/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Dave Esparza. Budget Manager. Municipal 

Railway. 

Amended to change date on page 1. line 20. from "April 25" to "May 2"; same title. Supervisor Bierman 

absent for vote. 

AMENDED. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 






000857 [Prop J, Contracting Out Legal Process Server Services] 

Resolution concurring with the Controller's certification that legal process server services can be practically 
performed for the District Attorney, Family Support Bureau, by a private contractor for a lower cost than 
similar services performed by City and County employees. (District Attorney) 
5/4/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst. Myer ( Jue, District Attorney's Office 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 

DOCUMENTS DEPT 



JUL 2 ^ 

SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco 



Printed at f:44 IK »n ' M M 

4 •' 

/ 1 C. /C\"> AC, 



Finance and Labor Committee 



Meeting Minnies 



July 1'). 201)11 



001080 IReserved Funds, Department of Human Services] 

Hearing to consider release of reserved funds, Department of Human Services. (Fiscal 'tear 1999-2000 

Budget), in the amount of $60,000 to fund the CalWORKS College Scholarship program (Human Services 

Department) 

6/2/00, RECEIVED AND ASSIGNII) to Finance md I ahor Committee 

Heard in Committee Speakers Harvey Rose, Budget Analyst; Janet Diamond. Department "I Human 
Services. 

Release of reserves in the amount "/ $60,000 approved 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Yee, Bierman. Ammiano 



000985 (Approving a four-year contract frith S.F. \\ ater Alliance to provide Program Management Services fur 

Pl'C Capital Improvement Program] 

Resolution approving the Public I tilities ( ommission Program Management Sen ices contract w nh the San 
Francisco Water Alliance. (Public Utilities Commission) 
S M/00, RECEIVED AND ASSIGN! t> to finance and I anor Committee 

Heard in Committee Speakers Supervisor Ammiano, Ken Bruce, Budget Analyst's Office Supervisoi 
Larry Klein. Acting General Manager, Public i 'tilities Commission tf't 'Q Mike Quan, I 'tilities Engineering 
Bureau, PUC, Harvey Rose, Budget Analyst, lietor Macros, lac President PUC Commission, Ed 
Richardson. Bechtel Corporation. John Kluesener. Project Manager Bee ktel ( orporaHon, Ted l.akey. Deputy 
City Attorney Opposed David Novogrodsky. Local 21. JimBuker, Department Public li'orks. .'■ 
Victor Menotti, International Forum, Antonio Diaz, POPE R Chris Daly, Mission Iganda, DajaBov 
Peter Warfield 
Continued to August 2, 2000 
CONTINUED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001049 (Approving purchase of Adaptec Corporation land for PUC Milpitas Intertie Pipeline and Pump 
Station Project| 

Resolution approving a purchase of land from Adaptec Corporation in Milpitas. Santa Clara County, for a 
purchase price of 5491,319 and authorizing acceptance of a grant deed and easement deed and execution of a 
ground lease to Adaptec Corporation for a term of twenty-five years at an initial rent of 526.557.00 per year 
(Real Estate Department) 

(Fiscal impact.) 

5/31/00. RECEIVED AND ASSIGNED lo Finance and Labor Committee 

Heard m Committee Speakers: Haney Rose, Budget Analyst. Larry Klein. Acting General Manager, Public 

I tilities Commission. 

Amended to increase purchase price to S494.5I9; new title 

AMENDED. 

Resolution approving a purchase of land from Adaptec Corporation in Milpitas. Santa Clara County, for a 
purchase price of 5494.519 and authorizing acceptance of a grant deed and easement deed and execution of a 
ground lease to Adaptec Corporation for a term of twenty-five years at an initial rent of S26. 55"' 00 per year 
(Real Estate Department) 

(Fiscal impact.) 

RECOMMENDED AS AMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 



Printed at 9:44 AM on 7, ?fl W 



Finance and Labor Committee 



Meeting Minutes 



July 19, 2000 



001142 [Reserved Funds, Superior Court] 

Hearing to consider release of reserved funds, Superior Court (File 000271 : Ordinance No. 44-20), in the 
amount of $254,000 to fund costs of indigent defense in adult criminal and juvenile delinquency cases for the 
trial court. (Superior Courts) 
6/26/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Neil Taniguichi. Superior Court; Supervisor 

Yee; Supervisor Ammiano. 

Release of reserves in the amount of $254,000 approved. 

APPROVED AND FILED by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



001073 [Westside Non-Public School Day Treatment Program] 
Supervisor Yee 

Hearing to understand the reasons for the proposed closure of the Westside Non-Public School/Day Treatment 
Program and to find out where the severely emotionally disturbed youth who attend this school will be placed. 
6/5/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Supervisor Yee; Supervisor Ammiano; Manuelito Biag. Teacher; Parisa 
Farrohi, Clinical Case Manager; Jae G. Agu. Principal; Jennifer Weisenberger; Ed Harrington, Controller; 
Daz Lamparas, Local 790; Sai-Ling Chan-Sew, Community Mental Health Services; Bea Stevens, Executive 
Director, Westside Program; Barbara Thompson. President, Westside Board; Mary Rogers; Peg Morrison, 
Chief Program Officer; Supervisor Bierman. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



000852 [Library and Friends and Foundation Agreement] 
Supervisor Kaufman 

Ordinance approving a Memorandum of Understanding, dated as of July 1, 1999, between the San Francisco 
Public Library and the Friends and Foundation of the San Francisco Public Library ("Friends and Foundation") 
for use of space in the Main Library building for the performance of library-related services, generation of 
revenues for library department purposes, and assurance of private funds to provide support on an ongoing 
basis for the San Francisco Public Library System; amending Article XIII, Chapter 10, Part I of the San 
Francisco Municipal Code ("Administrative Code") by adding Section 10.1 16-6 thereto, authorizing the City 
Librarian, or his or her designee, to accept and expend any individual gifts from the Friends and Foundation of 
a value of $25,000 or less; and authorizing and approving certain agreements to be made between the City and 
the Friends and Foundation as contemplated by such MOU, including a lease of office and gift store space and 
an agreement giving the Friends and Foundation the right to manage the meeting rooms, auditorium and other 
space for private functions and special events and to charge fees for such uses. (Public Library) 

(Fiscal impact.) 

5/8/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 
5/22/00, SUBSTITUTED. Submitted by Supervisor Kaufman. 
5/22/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Susan Hilldreth, Acting City Librarian. 
Supervisor Yee; Kate Petrucione, Aide to Supenisor Kaufman. Supervisor Bierman Oppose Jama ( 'haffey, 
Daja Bowler; Earnestine Weiss; Peter Warfield; Ms. Simpson. Gray Panthers 
Continued to August 2, 2000. 
CONTINUED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 



Primed al 9:44 <M on "21100 



/ inuine and Labor Committee Meeting Minnies July 19, 2000 



001137 |Pl'C-Santa Clara Valley Water District agreements for the Intertie Pipeline and Pump Station Project| 
Resolution authorizing the General Manager of the Public I ulities Commission to execute an agreement on 
behalf of the City and County of San Francisco. (Two agreements with Santa Clara Valley Water District for 
the development and operation maintenance of the Intertie Pipeline and Pump Station Project in the C ity of 
Milpitas.) (Public Utilities Commission) 

(Fiscal impact.) 

6/14/00. RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heart! in Committee Speakers: Harvey Rose. Budget Analyst. Larry Klein. Acting General Manager. Public 
I tih ties c 'ommissioH 
RECOMMENDED by the following \otc: 
Ayes: 3 - Yee, Bierman, Ammiano 



001050 |Bookstore 5-year concession lease at S.F. International Airport at a minimum annual real of SI. 153. 000 
for the first year] 

Resolution appro\ ing the North Terminal Bookstore Lease between Books. Inc. and the City and County of 
Sao Francisco, acting by and through its Airport Commission (Airport Commission) 
6/2/00. RECI I \ 1 I) AND ASSIGN) Dlo Finance and Labor Cw nu i i Uc e . 

Heard in Committee Speakers Harvey Rose. Budget Analyst. Jon Ballesteros, Airport 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee. Bierman, Ammiano 



001 130 [Airport Concession Lease - North Terminal Newsstand for a term of 5 \ears. at a minimum annual rent 
of S51 2.256 for the first year| 

Resolution approving the North Terminal Concourse Newsstand Lease between CalStar Retail. Inc. and the 
City and County of San Francisco, acting by and through its Airport Commission. (Airport Commission) 
6/12/00. RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers Harvey Rose. Budget Analyst. Jon Ballesteros Airport 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001 138 |Prop J. Contracting Out Budget Analyst Services) 

Resolution concurring with the Controller's certification that Budget Analyst services can be practically 
performed by private contractor for lower cost than similar work services performed by City and County 
employees. (Clerk of the Board) 

6/14/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 
Heard in Committee. Speaker: Ed Harrington. Controller. 
RECOMMENDED by the following \ote: 
Ayes: 3 - Yee. Bierman. Ammiano 



City and County of San Francisco 3 Printed ax 9:44 i M on '70 00 



Finance and Labor Committee 



Meeting Minutes 



July 19,2000 



001249 [Second Amendment to Moscone Project Lease (George R. Moscone Convention Center Lease Revenue 
Bonds, Series 1988 and 1992)] 

Resolution approving and authorizing the execution and delivery of a Second Amendment to project lease and 

certain related actions. (Mayor) 

7/5/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. Department requests this item be calendared at the July 19, 2000 

meeting. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Sarah Hollenbeck. Mayor's Budget Office; 

Supervisor Yee. 

RECOMMENDED by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



000216 [Transportation for Welfare to Work participants! 
Supervisor Bierman 

Hearing to determine what, if any, measures have been adopted by Muni to ensure that those participating in 

the Welfare to Work programs are provided with adequate means of reaching then - places of employment, 

especially transportation for nighttime employees, particularly those employed at the San Francisco Airport. 

1/31/00, RECEIVED AND ASSIGNED to Transportation and Land Use Committee. 

3/28/00, TRANSFERRED to Finance and Labor Committee. 

4/5/00, CONTINUED TO CALL OF THE CHAIR. 

5/10/00, CONTINUED Heard in Committee. Speakers: Joyce Miller, Coalition on Homelessness Continued to July 19, 2000. 

Heard in Committee. Speaker: Earnestine Weiss. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



ADJOURNMENT 



The meeting adjourned at 2:00 p.m. 



City and County of San Francisco 



Printed at 9:44 ( M on '70.00 



390.454 

3 
7//1/00 



[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 




CITY AND COUNTY ®t3BttiBRm)j:) OF/SAN FRANCISCO 

F SUPER 

v — 

BUDGET ANALYST 

1390 Market Street. Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



July 13, 2000 
TO: < x Finance and Labor Committee 

FROM: ^Budget Analyst 
SUBJECT: July 19, 2000 Finance and Labor Committee Meeting 

DOCUMENTS DEPT. 



Item 1 - 00-0855 



Department: 



Item: 



Amount: 
Description: 



Public Transportation Commission 
Municipal Railway (MUNI) 



JUL 18 

SAN FRANCISCO 
PUBLIC LIBRARY 



Resolution approving an agreement between the City and 
County of San Francisco and the Bay Area Rapid Transit 
District (BART) authorizing payment from BART to the 
Municipal Railway (MUNI) for transfer trips provided in 
Fiscal Year 1999-2000. 

$2,175,648 

The proposed resolution would approve an agreement 
between the City and BART for BART to reimburse 
MUNI an amount of $2,175,648 for FY 1999-2000. BART 
makes this annual payment to compensate for BART 
patrons who use MUNI for the purposes of linking up 
with BART. This BART payment to MUNI for FY 1999- 
2000 of $2,175,648 is $109,135 more than the BART 
payment to MUNI for FY 1998-1999 of $2,066,513. 

According to Ms. Linda Coquia of MUNI, a payment by 
BART to the City is mandated by the Metropolitan 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Transportation Commission (MTC). The payment of 
$2,175,648 for FY 1999-2000 is based on the prior year's 
payment, which was $2,066,513 for FY 1998-1999, with 
adjustments for changes in the amount of funding 
allocated to BART from the collection of Sales Taxes in 
three of the four counties BART travels through - San 
Francisco, Alameda and Contra Costa. Ms. Coquia 
advises that although San Mateo County is partially 
traversed by BART, its residents are not charged Sales 
Taxes to provide funding for BART. 

Comments: 1. Ms. Coquia reports that the proposed payment of 

$2,175,648 is $30,594 more than the $2,145 
estimated payment from BART included Ml NTs FY 
1999-2000 budget. According to Ms. Peg Stevenson of the 
Controller's Office, the surplus revenue of $30,594 will 
result in a reduced General Fund contribution to MUNI 
in FY 1999-2000 in an equivalent amount. 

2. Ms. Coquia advises thai BART has made annual 
payments to MUNI under agreements similar to the 
proposed Agreement since FY 1986-1987. The 
Attachment, provided by MUNI, contains a schedule of 
such annual payments mad'' to MUNI by BART since FY 
L990-1991 

3. The proposed Agreement contains a mutual 
indemnification provision which states that the City and 
BART agree to indemnify, save harmless and defend each 
other, each other's officers, agents and employees from 
legal liability of any nature or kind on account of any 
claim for damages to property or personal injuries to or 
death of person or persons to the extent that any such 
claims are caused by or result from, and in proportion to, 
the negligent acts or omissions or willful misconduct of 
the indemnifying party, its directors, officers and 
employees, unless such claims arise out of the sole 
negligence or willful misconduct of the party seeking 
indemnification or its directors, officers, agents and 
employees. 

According to Mr. Keith Grand, the City's Risk Manager, 
the additional risks to the City as a result of the mutual 
indemnification provision contained in the proposed 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Agreement are negligible, and Mr. Grand has 
recommended approval of the mutual indemnification 
provision. 

4. According to Ms. Coquia, the subject resolution 
incorrectly states that the Public Transportation 
Commission adopted Resolution No. 00-041 on April 25, 
2000, authorizing the Director of Public Transportation to 
execute the proposed agreement with BART for FY 1999- 
2000. The subject resolution should be amended to state 
that the Public Transportation Commission adopted 
Resolution No. 00-041 on May 2, 2000. 

Recommendations: 1. Amend the proposed resolution to change the date the 

Public Transportation Commission adopted Resolution 
No. 00-041 from April 25, 2000 to May 2, 2000, in 
accordance with Comment No. 4 above. 

2. Approve the proposed resolution, as amended. 



BOARD OF SUPERVISORS 

Bl'DGET ANALYST 



Attachment 




SAN FRANCISCO MUNICIPAL RAILWAY 



FINANCIAL REPORTING & SYSTEMS UNIT 
425 Mason street, 3 rd Floor, San Francisco, CA 94102 
TEL(4 15) 923-2597 FAX (415) 923-2439 



BART TRANSFER PAYMENTS TO MUNI 
FROM FY 1991 THROUGH FY 2000 



Fiscal Year 


Payments 


% Increase 


1990-91 


SI, 537,600 




1991-92 


1,562,100 


1 .59% 


1992-93 


1,511,900 


-3 21% 


1993-94 


1,546,252 


27% 


1994-95 


1,574,119 


1.80% 


1995-96 


1,650,823 


4.87% 


1996-97 


1,806,913 


9.46% 


1997-98 


1,934,563 


7.06% 


1998-99 


2,066,513 


6.821% 


1999-2000 


2,175,648 


5.28% 



Note: 

BART Feeder calculation of the annua! transfer pyament from BART to MUNI is based on tb 
payment and the rate of growth of BART Sales Tax Revenue over the prior r*o years. Info pi 
Joseph D. Evinger of BART. 



Word document/BART Feeder Schedule of Payments, Linda Q. Coquia 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Item 2 - File 00-0857 

Department: 

Item: 



Services to be 
Performed: 



Description: 



Department of Child Support Services 

Resolution approving the Controller's certification that 
legal process server services can continue to be practically 
performed for the Department of Child Support Services 
(formerly the District Attorney, Family Support Bureau) 
by a private contractor for a lower cost than similar 
services performed by City and County employees. 



Legal Process Servers for the Department of Child 
Support Services 

Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for legal 
process servers for FY 2000-2001 would result in 
estimated savings as follows: 





Lowest 


Highest 




Salary 


Salary 


Citv-Operated Service Costs 


Step 


Step 


Salaries 


$277,427 


$327,652 


Fringe Benefits 


89.693 


97,589 


Total 


$367,120 


$425,241 


Operating Costs 






Automobile Costs 


$27,300 


$27,300 


Other Operating Costs 


33.000 


33.000 




$60,300 


$60,300 


Total 


$427, 120 


$485,541 


Contractual Services Cost 


176.359 


181.141 


Estimated Savings 


S251.061 


$304,400 


BOARD OF SUPERVISORS 







BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Comments: 1. According to Mr. Merlin Zimmerly of the Department of 

Child Support Services (formerly the Family Support 
Bureau in the District Attorney's Office), legal process 
server services were first certified, as required under 
Proposition J ^Charter Section 10.104) in 1985. Since that 
time, legal process server services have been continuously 
provided by an outside contractor and been certified by 
the Controller for each contract renewal 

2. According to M- Violet Lee-Fonu of the Purchasing 

Department, the original contract with the current 
contractor. L & L Legal Assistance, was for the one-year 
period July 1. 1996 through June 30, 1997. Each year 
since July 1. 1997, the Purchasing Department has 
exercised its option to extend the contract for a one-year 
period. According to Ms. Lee-Fong, L & L Legal 
Assistance is certified by the Human Rights Commission 
(HRC> ;i> i Minority Business Enterprise f.MBE). 

3. The Contractual Services Cost used for the purpose of 
this analysis is based on L & L Legal Assistance's 
project. m! actual costs for FY 2000-2001. 

4 According to Ms. Lee-Fong. the Purchasing Department 
recently issued a Request for Proposal (RFP) for legal 
proc rvices and the bids are due by Augu.-t 1 

2000. If this proposed resolution is approved, the 
Purchasing Department would enter into a new contract 
for legal process server services beginning approximately 
October 1, 2000. Ms. Lee-Fong advises that L& L Legal 
Assistance is currently performing legal process server 
on a earn-over month-to-month basis at the FY 
1999-2000 rates. 

5. According to Mr. Zimmerly. the projected contractor 
costs are based on the volume of activity and are not a 
fixed cost. The projected volume of activity for FY" 2000 - 
2001 is the same as in prior years. The cost of contracting 
for legal process servers would be based on the actual 
volume of services provided. 

6. The budgeted automobile cost of $27,300 is based on 
reimbursing legal process servers SO. 31 per mile for 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

traveling an estimated 88,065 miles each year. Mr. 
Zimmerly notes that this mileage estimate is the same as 
in prior years. Other operating costs represent telephone 
and materials and supplies expenses. 

7. The Controller's supplemental questionnaire with the 
Department's responses is shown as an Attachment to 
this report. 

Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Attachment 



CHARTER 3.300-1 (PROPOSITION J) QUESTIONNAIRE 

DEPART ,*v! E N T A = 3miiv Support Bureau 

CONTRACT SERVICES Leoal P'ocess Service 

NTRAC7 PERIOD: Jmv i 2C0C ■ Jung 30 20C : 

Who oerformea activitvservice prior :o contracting put? 

Pour ^amiiv Sacccr Bureau starf. 2 3102 3 roc3ss Severs anc 2 3' ES r 5£ Invesngat 
a* time, howeve' tne vciume or required services was s;cmfic3r,;;v low< 
rent need. 

Number of City emolovees laio orf as a result 0< contracting ou' 1 

Two vacant position i2 3102s] were celeted in P v 3-1-35 bucget 

Ex^iam cispcsition or emoiovess if they were not laid oft' 

N - 

St percentage of Citv empioyee s time is spent on services i 

51 How long have the services been contracted out 1 Is thi to be a one-time or an 

ongoing reauest for contracting out? 

S.nce r;scal Vear 1985-36. Ongoing. 

Jt was the first fiscal year icr a Prooos;tion J certification? ^as it been certified for 
each sucsequent year? 

: sea. Year 1 9S5-S6 Yes. 

.v will contract services meet the gcais of your M8E/WBE Action Plan 7 

Current contractor is a Minority Business Enterprise IMBE 

Does the proposed contract require that the contractor provide health insurance foi 

ayees? Even if it is net required, does the propeseo contractor provide he 
insurance for its employees? 

Contract coes net require contractor to provide health insurance. However current 

contractor dees provide nealth insurance. 

Ices the proposed contractor provide benefits tc employees with spouses? if so. are the 
same benefits provided to employees with domestic panne- the crcccse: 

contractor comply with the Domestic Partners ordinance 7 

Current contractor provides the same benefits to all emolovees. 

Decsrtment Representative: "•?' ■" Z mme"-/ 

s esnone Number 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Item 3 - File 00-1080 

Department: 

Item: 

Amount: 
Source of Funds: 

Description: 



Budget: 



Department of Human Services (DHS) 

Hearing to consider release of $60,000 in reserved funds 
to fund the CalWORKS College Scholarship program. 

$60,000 

General Fund monies reserved in the Fiscal Year 1999- 
2000 Department of Human Services budget. 

During the FY 1999-2000 budget hearings, the Finance 
and Labor Committee recommended and the full Board of 
Supervisors approved that $200,000 for the CalWORKS 
College Scholarship Program be placed on reserve 
pending submission of program budget details. Of the 
amount of $200,000, the Finance and Labor Committee 
approved release of $140,000 to fund the CalWORKS 
scholarships in March of 2000 (File 00-0348) and retained 
$60,000 on reserve to fund administrative costs, which 
include (a) administration and disbursement of the cash 
grants and (b) a mentoring program for CalWORKS 
scholarship recipients, pending submission of budget 
details. 

Approval of the proposed release of reserved funds in the 
amount of $60,000 would authorize DHS to enter into a 
contract with Lifetime, a non-profit organization, which 
was selected by DHS through a Request for Proposal 
(RFP) process, to administer the CalWORKS College 
Scholarship Program. 

The summary budget for the proposed contract with 
Lifetime is as follows: 



Salaries and benefits 
Operating expenses 
Capital expenses 

Subtotal 
Hewlett Foundation grant 

Balance of funds needed 



$51,964 
24,826 
1.000 
$77,790 
(17.790) 
$60,000 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

The Attachment, provided by DHS, contains budget 
details for the summary budget noted above. 

Comments: 1. According to Ms. Janet Diamond of DHS, the 

scholarship program would provide scholarships in FY 
2000-01. ranging from approximately $1,400 to $2,800 
each, to approximately 70 eligible CalWORKS 
participants who are pursuing college degrees which 
extend beyond their 18 to 2 1 month limit for CalWORKS 
aid and services. Ms Diamond states that the amount of 
- 1 10,000, which was released by the Board of Supervisors 
in March of 2000, has not been expended and is available 
to fund scholarships in FY 2000-01. Ms. Diamond ad\ 
that such funds were not expended prior to June 30, 2000, 
because no CalWORKS participant.- had reached th 
month limit for receiving aid. which is a requirement for 
the scholarship program. In addition to the $140,000 in 
General Fund monies for scholarships, Lifetime would 
provide a -rant of $'12.(100 for scholarships, for a total 
scholarship amount of $182,000. 

2. According to Ms Diamond, the proposed contract with 
Lifetime would include (a) administration and 

disbursement of cash grants to eligible program 
participants, and (b) a mentoring program to assist 
CalWORKS College Scholarship Program participants in 
achieving their school goals. Under the proposed contract 
Lifetime would recruit and train volunteer mentors to 
assist program participants in their schoolwork, including 
maintaining a full-time course load with a grade point 
►fat hast 2.0, and making the transition into the 
work environment. Lifetime would also assist students in 
solving problems they might encounter with childcare or 
other family needs. Lifetime would perform outreach to 
professional organizations to recruit mentors and to 
provide a network for career development, provide mentor 
screening and training, and provide intervention if the 
.-tudent encounters school or family problems. 

Under the proposed contract Lifetime would subcontract 
with a nonprofit organization. Scholarship Management 
Services, and allocate S6.000 of the $77,790. for the 
administration and disbursement of the cash grants. 
Under the contract with Lifetime. DHS would determine 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



which students are eligible for the CalWORKS College 
Scholarship Program and would jointly develop a timeline 
for disbursement of cash grants with the contractor, 
Lifetime, and the subcontractor, Scholarship 
Management Services. Lifetime and Scholarship 

Management Services would jointly develop the grant 
application form, and Scholarship Management Services 
would forward the forms to eligible participants, verify 
school enrollment, and disburse the cash grants. 



Recommendation: Approve the proposed resolution 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



JUL- 13-2000 17:38 



DEPT OF HUMAN SUCS 



Attachment 
Page 1 of 4 





A C 


I B 


I E 


1 
2 

3 

4 


Appendix B. Page 
Document Date 

DEPARTMENT OF HUMAN SERVICES CONTRACT BUDGET SUMMARY 
BY PROGRAM 


1 
5/3 1/2000 


5 

a 


Contractor's Name 
Low-lncc me Families' Empowerment tfirouch Education (dba LIFETIME) 


Contract Term 
6/15/00-5y30A)1 


7 
8 


(Oiecx One) New iX Renewal Modification 

If modification, Effect ve Date of Mod. No Of Mod. 


9 


Program CafWORXs Grant Fund Management/Memonng Program 


Total 


10 


Budget Reference Page No.(6) 










11 


Program Term 








6/15/00-6/3070' 


12 
13 


Expenditures 
Salaries J Benefits 








$51,964 


14 


Operating Expense 








$24,826 


15 


Capital Expenditure 






18 


Subtotal 






$77,790 


•7 


Indirect Percentage (%) 











18 


Indirect Cost (Line 18 X Une 17) 








Su 


19 


Total Expenditures 








$77.79 


21 


DH3 Revenues 

General l-'und 








$80. 0C0 


22 












JJ, 












2-1 












:s 












> 








" 




:- 










:■■ 












.-"* 


TOTAL CHS REVENUES 








:- 


30 

31 


Other Revenues 










j: 


Hewlett t-auncaoon Grant 








517.790 


V. 










!4 












^ 












36 


Total Re. trues 








$77,750 


37 


Full Time EejuTvaJent (FTE) 








1 35 


39 


P'eparee by FR Telephone No.: 




Oate 5/31/00 


40 
41 


OHS-CO Review Signature: 
DHS«1 






i- :::: 





JUL- 13-2000 1?:38 



DEPT OF HUMfiN SUCS 



Attachment 



Paee 2 of 4 





A 


I B j C | D | E | F | G H 


1 

2 
3 
4 

5 
6 

7 

8 

9 
10 
11 
12 


Program Name: 

(Same is Line 9 on DHS #1) 

TERM 
POSITION TITLE 


Appendix B, Page 2 
Document Date: 5/31/00 

Salaries & Benefits Detail 


6/15/00-6730/01 
FTE SALARIES 


FTE SALARIES 


FTE SALARIES 


TOTAL 


13 


Executive Director 


0.30 


$13,500 










513.500 


14 


Program Director 


0.50 


316,000 










S16.000 


15 


Progran Assistant 


0.50 


$12,500 










512,500 


16 


Finance Assistant 


0.05. 


$1,303 










S1.303 


17 


















18 


















19 


















20 


















21 


















22 


















23 


















24 


















25 


















26 


















27 


















28 


















29 


















30 

31 
32 

33 
34 

35 

36 
37 


TOTALS 

EMPLOYEE FRINGE BENEFITS 

TOTAL SALARIES & BENEFITS 
DHS #2 


1.35 


$43,303 










$43,303 




0.20 


S8.661 










S8.661 






551,964 










S5 1,964 


2/1/2000 



JUL- 13-2000 17:33 



DEPT OF HUMAN SUCS 



Attachment 
Page 3 of A 





A B | C | D I t |F| G 


IH| 1 |j| K 1 


1 




Appendix 8. Page 3 


2 




Document Date: 5/31/00 


4 


Program Name: 




5 
6 
7 
8 


(Same ta Line 9 on DHS #1 ) 




Operating Expense Detail 




9 

10 






11 




TOTAL 


12 
13 
14 

15 
16 
17 
18 
19 
20 
21 
22 


Fxpend rum Cxte^ny TERM 6/15/00-4/30/01 




Rental of Property $3,115 


U0iitiM( -i»c. water, Gas. Phone. Scavenger) $4,569 


Office S jppliea, Postage 52.078 


Building Maintenance Supplies and Repair S346 


Printing and Reproduction $365 


insurance S846 


StaffTralning P.600 


Staff TraveHlocal A Out of Town) $1,087 


Rental of Equipment 


CONSU _TANT/SUECONTRACTOR DESCRIPTIVE TITLE 




23 


Scnolair.hip Mgmt Sarvica S6.0CC 




:-■ 


BeokkMotr Ji.320 


25 


Computur Conauitart $600 


26 




27 


OTHER 




28 






29 




30 




3-. 




32 




33 






34 
35 


TOTAL OPERATING EXPENSE $24,826 








36 


DHS #3 


:-::•:: 



JUL- 13-2000 17:39 



DEPT OF HUMAN SUCS 



Attachment 
Page 4 of 4 





A | B CD 


I E | F 


1 

2 
3 

4 

5 

6 
7 
8 

9 
10 


Program Nama: 

(Same a 3 Line 9 on DHS #1 ) 

Capital Expenditure Detail 
(Equipment and Remodeling Cost) 


Appendix 8. Page 4 
Document Date: 5/31/00 

TOTAL 


EQUIPMENT TERM 


6/15/00-8/30/01 




6/15/00-6/30/0 


11 


No. 


ITEM/DESCRIPTION 










12 


1 


Computer 


$1,000 






$1,000 


13 














14 














15 




p 










16 














17 














18 














19 














20 
21 
22 


TOTAL EQUIPMENT COST 


S 1.000 






$1,000 


REMODELING 






23 
24 


Description: 


















25 












26 












27 












28 
29 
30 

31 
32 

33 


TOTAL FtEMODELING COST 


















TOTAL CAPITAL EXPENDITURE 




81.000 


(Equiprr 
DHS#4 


ont and Remodeling Cost) 




2/1/2000 



TOTAL P. 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Item 4 - File 00-0985 



Department: 
Item: 



Amount- 



Public Utilities Commission (PUC) 

Resolution approving the Public Utilities Commission 
Program Management Services Contract with the San 
Francisco Water Alliance, a joint venture of Bechtel 
Infrastructure Corporation, The Jefferson Company, and 
Sverdrup Civil, Inc. 

Up to $45,000,000 over four years. According to Mr Michael 
Quan of the PUC, this maximum contract amount comprises 
an estimated (a) $8,000,000 for Contract Year 1. (b) 
$14,000,000 for Contract Year 2, (c) $12,000,000 for Contract 
Year 3, and (d) $11,000,000 for Contract Year 4. 

According to Mr Manfred Wong of the PUC. the amount of 
$45,000,000 was initially approved by the PUC 
Commissioners on the basis of an estimated cost of 
$15,000,000 for each of three main categories of work to be 
performed by the Contractor over the term of the subject 
contract. The relative proportions of estimated costs of each 
of these categories of work are as foil' 



(1) The Program Management Office, which would provide 
advice on the overall direction of the program, is 
estimated to cost approximately $12,000,000 over the 
four year contract. 

(2) Project and construction management services are 
estimated to cost approximately $14,500,000. 

(3) Technical support services are estimated to cost 
approximately $18,500,000. 



Source of Funds: 



Mr Wong states that the PUC expects to fund the subject 
contract through existing bonds 1 , operating revenues, and 
future bond proceeds, progressively securing funding as the 
capital improvement program proceeds. Mr. Wong states 
that if future bond funding for the proposed capital 
improvement program is not approved by the voters or 



1 In November of 1997. San Francisco voters approved S304. 000.000 in Water Revenue Bonds. The 
in also utilize S238, 000.000 remaining available funds from bonds issued in 1991. 1992. and 
1996 for the replacement of existing facilities and for compliance with Federal and State law Mr 
Wong advises, however, that funding beyond these approved amounts, which total $542,000,000. is 
uncertain. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

funding for the capital improvement program is not 
appropriated by the Board of Supervisors, the Contractor 
would not be requested or paid to perform program 
management services. According to Mr. Wong, the PUC 
believes that over the course of the 10 to 15 year capital 
improvement program, the cost of program management 
services contractors would be offset by the savings generated 
by the Contractor. Mr. Wong states that program 
management services contracts' ability to offset costs through 
savings have been demonstrated internationally. The PUC 
has not, however, provided substantive data to prove this 
assertion. Furthermore, the subject contract neither (a) 
quantifies the savings expected by the PUC, (b) specifies the 
performance measures which would determine the extent of 
program cost savings, nor (c) specifies the relationship 
between savings and Contractor remuneration. 

Description: Under the subject contract, the Contractor would provide 

program management services to the PUC to organize and 
implement its capital improvement program by: 

• Providing specialized expertise in the management of 
very large capital programs. 

• Improving the PUC's engineering and construction 
operations by developing program management and 
control plans, systems, tools, and reports. 

• Providing personnel for workload peaks (except on 
detailed design work). 

• Identifying new financing sources which could include 
State loans, Bay Area Water Users Association financing, 
Joint Powers Authority financing, design-build projects 
without ownership and transfer, lease purchases, sale- 
leaseback, and sale or lease of unproductive assets such 
as excess property owned by the PUC. 

• Designing a PUC staff development program. 

• Developing a public information program. 

• Assisting disadvantaged business enterprises. 

With regard to assisting disadvantaged business enterprises, 
program participation goals of 30 percent minority-owned 
business enterprise (MBE) participation and 10 percent 
women-owned business enterprise (WBE) participation 
would apply to the first year of the subject contract. MBE 
program participation goals would increase 2 percent 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

annually and WBE participation would increase 1 percent 
annually. According to information provided by Mr. Quan, 
the Contractor's actual MBE/WBE participation rate will be 
in excess of the minimum first year requirements. 

Background: In February of 1998, the PUC published a draft of its long- 

term water enterprise capital improvement plan. The plan 
proposed a 12 year capital improvement program comprising 
approximately 200 water projects for a total cost of 
approximately $3,500,000,000 to (a) upgrade the water 
system infrastructure, (b) respond to increasing service 
demands, and (c) fulfil new regulatory requirements. 

Having undertaken initial program planning, the PUC 
proposed contracting out the program management of the 
capital improvement program The initial concept was for a 
ten year program management services contract 
(renegotiate every four years). Under that proposed 
contract, a chief program management contractor would 
report directly to the PUC Commissioners and contractor 
staff would provide long term assistance to UEB staff with a 
senior consultant team reporting to the UEB Manager. The 
proposed concept for the integration of PUC and contractor 
staff was that they would share decision-making 
responsibilities and would share the program risks. 

Following PUC staff members' December 15, 1998 
presentation to the Commission on the proposed capital 
improvement program, the Commission authorized the 
drafting of a Request for Proposals (RFP). As part of the 
RFP drafting process, in February of 1999 the PUC consulted 
with the International Federation of Professional and 
Technical Engineers (IFPTE) Local 21, AFL-CIO. In March 
of 1999. the IFPTE sought an injunction against the subject 
contract on the grounds that (a) Section 10.104 of the City 
Charter prevents contracts with private companies for 
program management services until the Controller and the 
Board of Supervisors have determined that such work can 
performed under private contract at a lower cost, and (b) its 
members would be unlawfully deprived of public sector work 
they could competently perform at a lower cost. On March 
13. 2000 the San Francisco County Superior Court issued a 
summary judgement in favor of the PUC and against the 
IFPTE on the grounds that Charter Section 10.104 did not 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



apply and hiring a program management contractor was 
justified by (a) the urgent need for the capital improvement 
program, (b) the PUC's need for specialized expertise over 
and above its commitment to hire more engineering staff, (c) 
the temporary nature of the program management 
contractors services, (d) the PUC's potential need for 
engineering assistance to staff temporary peak workloads, (e) 
the speculative nature of the IFPTE's claim that there would 
be duplication or displacement of PUC staff, and (f) the Civil 
Service Commission's approval of the subject contract on 
June 4, 1999. According to Ms. Linda Ross of the City 
Attorney's Office, the IFPTE has subsequently filed a Notice 
of Appeal. As of the writing of this report, the Budget 
Analyst has no further information on the status of this 
appeal. 

During the lawsuit, negotiations between the PUC and the 
IFPTE significantly scaled down the subject contract's 
original concept. The RFP, as advertised in July of 1999, was 
for a four year contract not to exceed $45,000,000 (depending 
on availability of funding), in which as-needed contractor 
staff would report to UEB managers. There would be no 
direct reporting line to the PUC Commissioners, PUC 
management would retain full decision-making 
responsibilities, and contractor staff would not directly 
supervise City employees. 

Four private firms and joint ventures submitted bids on 
September 15, 1999. These were: 

• San Francisco Water Alliance, a joint venture of (1) 
Bechtel Infrastructure Corporation, (2) The Jefferson 
Company, and (3) Sverdrup Civil, Inc., in association with 
(a) Olivia Chen Consultants, Inc., (b) Carollo Engineers, 
(c) Raines, Melton & Carella, Inc., (d) Cooper Pugeda 
Management Inc., (e) Greg Roja and Associates, Inc., (f) 
Whitted Dawson Associates, Inc., and (g) Orion 
Environmental Associates. 

• The H2O Partnership, a joint venture between (1) 
O'Brien-Krietzberg Associates, (2) CH2M HILL, and (3) 
EPC Consultants, Inc, in association with (a) Cornerstone 
Concilium. Inc., (b) DAJA. Inc., (c) Mendoza and 
Associates, (d) Savior Consulting Group, (e) JFVV 
Consultants, (f) Pendergast & Associates, (g) Butler 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Enterprise Group, (h) Micro Search Environmental, (i) 
Ocampo-Esta Corporation, and (j) Cervantes Design 
-ociates. 

• San Francisco Water Associates, a joint venture between 
Parsons Infrastructure and Technology Group Inc., AGS 
Inc., and Don Todd Associates, Inc., in association with 11 
subcontractors. 

• Montgomery Watson Americas. Inc.. in association with 
27 subcontractors 

A team of City staff comprising Ms. Virigina Harmon of the 
Human Flights Commission. Mr. Bill Keany of the PUC. Mr 
Paul Mazza of the PUC, Mr. Quan, and Mr. Wong reviewed 
all four proposers by means of client its Murine 

November and December of 1999. A four member expert 
evaluation panel then interviewed the four proposers and 
scored each of them against the criteria set out in the RFP 
(as shown in Attachment I). This evaluation panel cone 
of Dr. Johnnie Clark, a financial consultant, Ms Margaret 
Lepor' renting the Bay Area Water I fa :ation, 

Ms. Ray net ta Grant, a local government water utility 
engineering manager, and Mr. Kevin Lyons of the PUC. The 
evaluation team scored the HjO Partnership proposal 
highest (with I -core of md the San Francisco '• 

Alliance second highest (with a score of 2,700). Montgomery 
D Americas. Inc. scored 2.480. while San Francisco 
Water Associates scored 2,460. The PUC Commissioners 
interviewed the top two scoring joint ventures at a public 
meeting on April 7, 2000. and indicated a preference for the 
San Francisco Water Alliance, subject to successful 
negotiations over contract costs. No reason was given as to 
why the Commissioners gave first preference to the San 
Francisco Water Alliance which had previously received a 
lower score from the expert evaluation panel than the H_>0 
Partnership. On May 10. 2000, the PUC awarded the 
proposed contract to the San Francisco Water Alliance 
subject to final contract negotiation and approval of the 
Board of Supervisors. 



ires are calculated by multiplying the qualitative score for each one of the six criteria by the 
respective weight to obtain the weighted score for each of the criteria. For example, the weight for 
Criterion 6 (Understanding of SFPUC Program) is 10: therefore, a qualitative score of 5 will 
translate into a weighted score of 50 for an individual evaluator. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Terras of the 

Subject Contract: Key contractual terms and conditions are as follows: 

• The City can, at its sole discretion, terminate the subject 
contract at any time. 

• The City has no obligation to fund the subject contract in 
lieu of funding other contracts. 

• The subject contract can only be extended beyond the 
initial term of four years with the Civil Service 
Commission's approval 3 . 

• The PUC controls the Contractor's role and assignments 
in terms of an annual implementation plan based, in part, 
on an annual performance review jointly conducted by the 
PUC and the Contractor. As a result of the annual review 
and the annual implementation plan, the City and the 
Contractor would determine the contractor staffing 
required during the next 12 months and the necessary 
contract budget. 

• Contractor and City staff would share City office space 4 
and work in combined teams under PUC managers. 

• Existing City staff would be used to the fullest extent. 
City engineers (or third party contractors) are the 
Engineers of Record 5 and construction managers for all 
capital improvement projects. The Contractor obtains 
written authorization from the City before (a) adding staff 
or subcontractors to its team, or (b) supplying personnel 
to provide expert services or to handle workload peaks. 

• The Contractor trains PUC personnel in systems, 
techniques, or technology used by the Contractor. 

• The Contractor assigns a core team of experienced 
individuals (named in the subject contract's appendices) 
for the duration of the contract. Replacements for key 
personnel are subject to the City's agreement. 



3 In the opinion of Ms. Ross, any extended contract would require (a) separate Civil Service 
Commission authorization, and (b) Board of Supervisors approval if the extended contract would cost 
the City more than $10,000,000. 

4 According to Ms. Wendy Iwata of the PUC, the PUC plans to spend approximately $300,000 in FY 
2000-01 to renovate City office space for contractor staff. 

5 The "engineer of record" is a State requirement that a certified engineer be legally responsible for 
approving the design of a structure so that it is safe for public occupancy. The engineer of record 
assumes liability for the design for both the duration of the contract and for the subsequent 
warranty period. While the proposed contract does not allow the Contractor to assume this role, it 
would permit the Contractor to provide preliminary or conceptual engineering services and pr> ■ 
schematic drawings to the extent necessary to define upcoming capital projects. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

• The Contractor's performance is subject to third party 
audit' 1 . 

• The Contractor reports monthly to the PUC on its 
performance. 

• To prevent conflicts of interest, the Contractor and its 
subcontractors cannot bid on PUC design proposals or 
construction contracts during the term of the subject 
contract. 

• The Contractor is an independent consultant fully liable 
for its acts and omissions. 

• During disputes, the Contractor and subcontractors waive 
all rights to discontinue services or seek any relief which 
would stop or delay the progress of capital improvement 
projects. 

Proposed Contractor 

Remuneration: Within an upper cap of $45,000,000 over four years, under 

the subject contract the PUC would pay the Contractor 
through a combination of (a) direct salai not including 

fringe benefits), (b) overhead costs (including fringe benefits), 
(c) a combination of fixed and performance fees, (d) 
administrative fees, and (e) other direct charges. To date, 
the PUC has not prepared an estimate breaking down the 
$ 15,000,000 budget into these five remuneration categories, 
according to Mr. Wong. 

(a) Direct salary costs: Under the subject contract, 
direct salary costs would be limited to the actual salaries of 
the Contractor's project managers and technical staff. 
Charges for home office staff such as secretaries, clerks, and 
accountants would be included in the overhead for work 
charged at the Contractor's offices except those working 
directly on the project as approved and budgeted by PUC 
project managers in the relevant task order. The subject 
contract specifies the direct hourly rate for key individual 
contractor staff (ranging in Contract Year 1 between $30.00 
to $76.15 per hour without overhead). The billing rate for 
Contractor staff including overhead, which comprises direct 
salary plus a multiplier, is capped at $140.00 per hour in the 
first year (the PUC General Manager can approve 
exceptions) but can be adjusted in accordance with the 



6 According to Mr. Wong, the PIT is in discussions with the City Controller's Office about the 
Controller's involvement in such audits. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Consumer Price Index thereafter. Salary rates can be 
adjusted annually by the amount of the change in the 
Consumer Price Index (CPI) for the previous year 7 . 

(b) Overhead Fees: Before the end of the first year of the 
subject contract, the Contractor would arrange for an 
independent audit of the overhead costs applied to direct 
salary costs. According to Mr. Wong, this audit would be 
performed by an independent auditor and would be reviewed 
by the Controller's Office in accordance with the standards of 
the Code of Federal Acquisition Regulations. Pending this 
audit, in the first year of the contract (depending on the 
actual results determined by the audit), provisional overhead 
fees would range between (a) 125 and 154 percent of direct 
salary costs for work performed by the prime consultants in 
their own offices, (b) 78 and 172 percent of direct salary costs 
for work performed by subcontractors in their own offices, (c) 
104 and 115 percent of direct salary costs for work performed 
by the prime consultants in PUC offices or construction sites, 
and (d) 113 percent of direct salary costs for work performed 
by the subcontractors in PUC offices or construction sites. 
The overhead rates would be adjusted annually, based on the 
annual audit. However, in no case can the audited overhead 
rate for any prime consultant or subcontractor exceed (a) 172 
percent for work performed in their own offices, or (b) 115 
percent for work performed in PUC offices or construction 
sites (117 percent if payroll tax is included). According to 
information provided by Mr. Quan, the negotiated overhead 
rates appear to be comparable with those negotiated for other 
large public sector capital improvement programs. 

(c) Fixed and Performance Fees: In addition to direct 
salary costs and related overhead fees, the Contractor would 
also be remunerated on the basis of the "performance/at-risk 
fee" arrangement outlined in the Table below, depending on 
the Contractor's achievement of tasks prescribed by the City, 
each task having a specific scope of work, timeframe, 
guaranteed maximum cost structure, savings target, and 
other performance measures. Assuming successful task 
completion, the Contractor receives a fixed fee as a 



7 Adjustments for individual Contractor employees could exceed the maximum CPI movement 
provided that the total adjustment dollars for Contractor employees dedicated to the subject contract 
does not exceed the maximum dollars based on the total direct salary paid on the contract for the 
previous year plus the CPI. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



percentage of the Contractor's contract billing for that task 8 . 
Assuming partial or complete achievement of the savings 
target and other performance measures, the Contractor 
receives some or all of an at-risk performance fee as a 
percentage of the Contractor- contract billing for that task. 
The percentage levels for both fixed and performance fees 
vary by contract year, as shown in the table below: 







Performance 






Fixed Fee as 


Fee as 






Percentage 


Percentage 






of Annual 


of Annual 




Contract 


Contract 


( nntract 


Maximum 


Year 


Billing 


Billing 


Total 


1 


- 


0.0% 


8.0% 


2 


7.0% 


4.5% 


11.5% 


3 


6.0% 


5.5% 


11.5% 


4 


5.0% 


6.5% 


11.5% 



According to information provided by Mr. Quan. the 
maximum total annual fee for Contract Years 2 through 4 
appears to be at the low end of the range of fees payable to 
program management services contractors involved in other 
public sector capital improvement programs. 

According to Mr Worm, the fixed fee component would be 
paid by the City as invoices are submitted by the Contractor, 
while the performance fee component would be paid by the 
City semi-annually. 



(d) Subcontractor Administrative Fee: The PUC would 
also pay an administrative fee to the Contractor's joint 
venture partners of 3 percent of subcontractors' direct 
salaries plus overhead costs. Mr. Wong states that this 
administrative fee reimburses the Contractor for some of the 
administrative costs related to managing a number of 
Disadvantaged Business Enterprise subcontractors. 
According to Mr. Wong, the 3 percent rate compares 



8 "Contract billing" comprises just the Contractor's billing for work performed. It includes neither 
authorized pass-throughs for other direct costs nor the fee amounts paid by the City for 
subcontractors' invoices. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



favorably to tbe industry average of 5 percent for such 
administrative fees. 

(e) Other Direct Charges: All other direct charges 
incurred by the Contractor would be approved in advance by 
the Manager of the UEB and would be reimbursed at cost. 
Such charges would be limited to out-of-town travel, 
messenger services, specialty printing, specialized software 
and hardware, and specialized services, materials, and 
equipment not provided by the PUC. Any equipment 
purchased through this contract would become the property 
of the PUC. 



Comments: Program Cost Savings 



1. UEB staff contend that the subject contract would secure 
program cost savings by means of economies of scale, 
program efficiencies, project acceleration, contract 
negotiation power, increased purchasing power, innovative 
technology, value engineering 9 , and controlled changes to the 
program's scope and schedule. UEB staff contend that 
relying on PUC employees to manage the capital 
improvement program would increase costs because it would 
lengthen the time taken to complete the program. Although 
the subject contract does contain a draft scope of work, down 
to a task level with estimated person hours and budgets, the 
Budget Analyst notes that the subject contract neither (a) 
quantifies the level of savings expected bv the PUC. (b) 
specifies the performance measures which would determine 
the extent of program cost savings (performance measures 
are still the subject of negotiation between the PUC and the 
Contractor), nor (c) specifies the relationship between 
savings and Contractor remuneration. 

The PUC argues that performance measures will change 
each year as a result of the annual implementation plan 
negotiations to be held between the PUC and the Contractor. 
Furthermore, the PUC states that the performance 
measurements to be included in the first year's annual 
implementation plan can be determined only after the 
subject contract has been signed and the Contractor has 



9 "Value engineering*' is the independent overview of a facilities plan, its design criteria, and its 
conception at no more than 20 percent of design completion, to ascertain how well and cost 
effectively a plan addresses the engineering problem it is meant to solve. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

2«5 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



begun working with the PUC. While the Budget Analyst 
concurs that annual review and modification of performance 
measures is appropriate, the Budget Analyst would expect to 
see first year performance measures in place (including the 
required level of program savings to be achieved in the first 
year by the Contractor) prior to Board of Supervisors 
approval of the subjed contract. The PUC anticipates cost 
savings to be achieved by the Contractor but has neither 
quantified them nor provided performance measurement 
criteria whuh would permit independent verification of the 
Contractor's achievement of such savings. 

2. The PUC expects the subject contract to result in program 

savings of at least - 15, 000, 000 in order to cover the 

maximum costs of the subject contract. However, as noted 
above, the subject contract does not specify how such 
program savings would be measured. The PUC's argument 
that such savings are achievable is supported only by the 
anecdotal evidence contained in six highly summarized case 
studies which make up the small sample described in 
Appendix 1 (prepared by the Budget Analyst based on 
information provided by the PUC). The PUC staffs 
presentation to the PUC Commissioners of three positive 
example- v. impanied by the disclaimer that 

"Meaningful measurement of cost savings is difficult ... 
because the benchmark is often not well defined, and most 
calculations are based on preliminary estimates of program 
costs made by the program management contractors 
themselves." Furthermore, the information presented was 
gathered verbally by PUC staff and is unsupported by 
audited written documentation. The second three examples 
represent a selection of public sector program management 
failures which neither fully evaluate the root causes of the 
cost overruns associated with those projects, nor explain how 
a program management consultant would address those 
problems. For example, the Budget Analyst notes that the 
cost of the Boston Central Artery Program has been 
significantly affected by project scope changes, 
environmental mitigation, and inflation, three factors which 
could be equally outside of the control of either public or 
private sector program manager- 

3. PUC retention of overall program management 
responsibility appears to have the following advantages over 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

26 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



sharing decision-making responsibility with, or delegating 
such responsibility to, a program management services 
contractor: 

• Program accountability, final decision-making, 
expenditure authorizations, and overall cost control 
responsibility reside appropriately with City employees. 

• PUC staff members' expertise in local water and sewer 
systems is maximized. 

• City employees are the most familiar with San Francisco's 
public sector administrative, appropriation, and policy 
development processes, and with the expenditure 
requirements of bond-funded programs. 

• An organizational focus on the capital improvement 
program will require the PUC to plan the future 
management of its infrastructure more strategically. 

Personnel Cost Savings 

4. PUC staff contend that the subject contract would secure 
considerable personnel cost savings for three reasons: 

(a) The PUC would not need to hire additional staff who 
would no longer be necessary once they had completed 
work related to the capital improvement program. PUC 
staff have not estimated the total amount of these alleged 
savings. However, given natural staff attrition over a 12 
year program comprising approximately 200 diverse 
projects, the Budget Analyst questions whether the PUC 
would actually need to terminate any staff after 
completion of the capital improvement program. 

(b) The Contractor could respond more flexibly to changing 
staffing requirements and workload peaks. The Budget 
Analyst notes, however, that redeployment or addition of 
contractor staff is subject to prior PUC approval which 
raises the question of whether such redeployment or 
addition of contractor staff would actually be faster than 
redeploying PUC staff. 

(c) Using contract staff would circumvent the difficulties in 
hiring new permanent staff (see Comments No. 6 and 7 
below). 

5. Mr. Phil Arnold of the PUC provided an informal 
comparison of UEB staff classifications at 1998-99 salary 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

27 



Memo to Finance and Labor Committee 

July 19. 2000 Finance and Labor Committee Meeting 



levels with the 1997-98 hourly billing rates for comparable 
-i. iff employed by a selection of as-needed UEB contractors. 
Mr. Arnold states that this comparison indicates that the 
UEB pays more for low level staff, but less for high level 
staff. Therefore, using the Contractor's more junior staff for 
peak workloads would be cheaper than the UEB hiring 
equivalent staff. The Budget Analyst notes, however, that 
low level staff are likely to perform functions which could be 
competently performed by City employees. In situations 
where the UEB only requires specialist technical skills for 
short periods of time, UEB staff contend that the higher cost 
of contractor staff is offset by the costs imposed by the civil 
service hiring constraints described below 

6. PUC staff emphasize the difficulty in hiring permanent 
City staff, citing the following reasons for hiring delays: 

il) The lengthy process to fill even recently vacated 
r which there is budgetary provision, as 
shown in Appendix II (prepared by the Budget Analyst 
based on information provided by Ms. I\\ 

(2) Outdated civil service lists, union protests about list 
certifications, and the Department of Human Resources' 
reluctance to permit provisional hires before lists are 
completely exhausted. 

(3) The lack of certain specialist job classes in the Civil 
Sei mmission's classification system which does 
not permit the PUC to request specific job skills within, 
for example, the construction management, architect, or 
engineer 

7. As shown in Appendix II. the PUC takes between 33 and 
68 weeks (or more) to hire a staff member into a budgeted 
position. Of this time, the Budget Analyst notes that 
between 21 and 29 weeks is consumed by processing the 
filling of a vacancy within the PUC. While the PUC needs to 
work closely with the other agencies involved in personnel 
hiring to expedite recruitment, the Budget Analyst strongly 

immends that the PUC also streamline its own personnel 
hiring practices. In a letter dated February 10. 2000 to the 
California State Auditor, the PUC General Manager wrote 
that the PUC personnel unit "was increased in 1998 by 
twelve positions (a growth of approximately thirty percent) to 
promote additional hiring.'" Despite these 12 new positions. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

28 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



and the three new personnel positions approved in the FY 
2000-01 budget (a 1204 Senior Personnel Clerk, a 1241 
Personnel Analyst, and an 1817 Procedural Writer), the 
Budget Analyst notes that ongoing internal PUC personnel 
processing delays seem to continue. Such hiring delays have 
significantly contributed to the UEB salary 
underexpenditure of $11,702,490 for the first 11 months of 
FY 1999-00 10 . 

8. The Budget Analyst also notes that the PUC has not 
formulated a rigorous staffing projection beyond FY 2000- 
2001, even for the short-to-medium term, to staff City 
positions for the capital improvement program. The PUC 
has not determined: 

• The exact number of full-time equivalent staff the PUC 
would require if the PUC was to provide all the staff 
required for its capital improvement program. 

• Those staff members' job descriptions, job classifications, 
and their level of seniority within those job classifications. 

• The most appropriate employment conditions for each 
position (for example permanent civil service, limited 
tenure, or temporary positions, or personal services 
contracts). 

• When an existing classification could not provide the 
necessary engineering expertise. 

• When staff from other City departments which employ 
construction management services staff could be used 11 . 

• The impact of attrition rates on employee turnover within 
different job classifications. 

The Budget Analyst notes that the lack of a staffing 
projection led the California State Auditor to recommend 
that the PUC "develop a formal comprehensive plan to 
outline the staffing requirements necessary to complete its 
capital improvement plans." 

9. The San Francisco Water Alliance has proposed that it 
will need to employ 45 staff for the first year of the subject 
contract. According to Ms. Iwata, the PUC is currently 



10 This underexpenditure figure includes both engineer and non-engineer salaries. 

11 Mr. Quan states that a review of DPW, MUNI, the Port, and the Airport undertaken in July and 
August of 1999 indicated that no such staff are currently available for PUC purposes. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



seeking the Contractor's justification for this number of 
contract staff given that the PUC will need to find office 
space for them. Without a staffing plan, the Budget Analyst 
is unable to compare the relative costs and benefits of using 
City employees versus consultants for the capital 
improvement program. Furthermore, the Budget Analyst 
questions what staffing projection criteria the PUC will use 
to evaluate the Contractor's staffing requ. 

PUC Performance and Workload Issues 

10. During the three years between FY 1997-98 and FY" 
1999-00. the PUC capital improvement program budget 
totaled > 1' 12,5 10. 036 (see Attachment I. provided by Mr. 
Wong). However, during the same three year period, the 
PUC expended just (266,752,104, or approximately 66 
percent, of that capita] improvement program budget (see 
Attachment II. provided by Mr. Won( 

The California State Auditor has expressed concern at the 
insufficient capital improvement program activity given the 
identified capital improvement needs. The California St 
Auditor identified the following causes for capital 
improvement program management problems at the PUC: 
the absence of an effective tracking m to monitor the 

progress of capital projects and the completion of preventive 
maintenance, much delayed cost and schedule estimates for 
all identified capital improvement projects, inefficient 
contracting procedures (see Comment No. 16 below), 
outdated project operations manuals and procedures, weak 
capital project and preventive maintenance monitoring, and 
inadequate formal project management training. 

11. As shown in Attachment III. in the five years between 
FY' 1995-96 and 1999-00. the number of filled UEB technical 
staff positions (denoted as "active engineers" in Attachment 
III) has increased by approximately 188.7 percent, from 62 to 
117. These technical staff are responsible for San Francisco 
Water Department (SFWD) and Hetch Hetchy Water and 
Power (HHWP) capital improvement projects only. 
According to Mr. Wong, under the Memorandum of 
Understanding between DPW and the PUC which 
transferred the responsibility for the Clean Water Program 
(CWP) from DPW to the PUC. DPW engineers remain 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

30 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



responsible for the technical aspects of CWP capital 
improvement projects which are funded by the PUC. 

12. In FY 2000-01, if the FY 1999-00 total of 117 filled 
technical staff positions is maintained, the current 39 
technical staff vacancies are filled, and the 12 new technical 
staff positions approved for FY 2000-01 are also filled, then 
there will be 168 filled technical staff positions in the UEB. 
This represents an approximately 271 percent increase in 
technical staffing positions since FY 1995-96. The FY 2000- 
01 capital improvement program budget for SFWD and 
HHWP is $150,870,700. This represents an average 
budgeted capital improvement project workload for each of 
the 168 UEB technical staff in the amount of $898,040 in FY 
2000-01. 

13. Budget Analyst notes, however, that in terms of actual 
SFWD and HHWP capital improvement program 
expenditures between FY 1995-96 and FY 1999-00 (as shown 
in Appendix III), an average workload per filled UEB 
technical staff position of $898,040 would be approximately 
40.5 percent higher than the previous high average workload 
of $639,140 in FY 1998-99. Mr. Wong of the PUC argues that 
the PUC could not achieve a 40.5 percent productivity 
increase per staff member. The Budget Analyst notes that a 
number of factors suggest that the PUC should be able to 
absorb at least a significant portion of that 40.5 percent 
workload increase: 

• The PUC has invested in a number of initiatives to 
improve productivity, including the implementation of a 
new automated system to track preventive maintenance 
requirements, the development of a formal management 
training program, and wider advertising of the continuing 
education opportunities for staff. 

• A considerable proportion of the new technical staff hired 
m FY 1999-00 were journey level or above. 

• New technical staff received enhanced training in FY 
1999-00. 

• Long-term UEB technical staffs experience and expertise 
should increase significantly each year. 

• The PUC's pool of technical expertise is growing with the 
planned increase from 117 to 168 technical staff in the 
UEB. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



The Budget Analyst notes that every 10 percent increase in 
productivity over FY 1998-99 levels for all 168 UEB technical 
Staff would mean that $10,737,552 less work would need to 
be assigned to Contractor -taft 

14. In addition, the Budget Analyst notes that the UEB 
augments its staff capacity by (a) assigning SFVV'D and 
HHWP projects to DPW. and (b) hiring architecture and 
engineering consultants through competitive procurement. 
On August 15, 1997 the PUC signed a Memorandum of 
Understanding with the DPW for engineering work in excess 
of I'EB's capacity This Memorandum of Understanding 
gives DPW the Bret right of refusal on PUC engineering 
which cannot be undertaken by PUC Staff. 

15 According to Mr Wong, the PUC is currently developing 
the latest update of its capital improvement program As 
this planning process will not be complete until the Fall of 
2000, the PUC is unable to advise the Budget Analyst as to 

the projected capital improvement program bu r each 

of the next four years. Mr. Wong advises that the capital 
improvement program budget- for each of the next four years 
are ex: be at least comparable to those in FY 1999-00 

644,430) and FY 2000-01 ($178,870,700). However, it 
is not possible to calculate with any precision what the 
workload per UEB technical staff member over the four years 
of the subject contract will be. Given this, and the absence of 
a staffing plan (as noted m Comments No. 8 and 9 above), 
the Budget Analyst questions the PUCs ability to accurately 
quantify the workload impact of the PUCs capital 
improvement program on UEB staff and. therefore, the 
PUCs need for contractor staff to help with workload peaks. 

Use of a Single Contractor 

16. The IFPTE expressed concern that too many services 
are being bundled into the subject contract which potentially 
(a) deters termination of the contract in the event of 
performance failure, (b) allows the Contractor to assign work 
to itself or its subcontractors, and (c) provides a disincentive 
for the Contractor to provide accurate performance 
information to the PUC. In response. Mr. Wong advises that 
these concerns have been addressed by the negotiated 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



contract in terms of (a) the termination of convenience 
clause, (b) City staff members' responsibility for final 
decisions, and (c) the requirement for regular monthly 
reports, semi-annual reviews, and annual audits. 
Furthermore. Mr. Wong advises that the PUC 
Commissioners prefer one contract in order to: 

• Centralize responsibility and accountability. By 
channeling the work through one prime Contractor, the 
PUC contends that it (a) makes the Contractor fully 
responsible for its output and the output of its 
subcontractors, (b) reduces the PUC's liability by having 
only one point of contact, and (c) reduces the 
subcontractors' liability because the prime Contractor 
carries the bulk of their liability. 

• Maintain integration of program management and 
construction because (a) the profit for the Contractor 
comes from savings achieved (as explained in the section 
on "Proposed Contractor Fees" above), not from the 
program management services, (b) the Commissioners 
want a Contractor with specific utility business expertise 
who cares equally about program management and 
construction, and (c) integration supports the goal of 
centralized responsibility and accountability discussed 
above. 

• Avoid multiple, expensive, and lengthy contractor 
selection processes. PUC staff contend that it is cheaper 
and quicker to have just one contract. With regard to 
cost, the PUC advises that the average cost of a contractor 
selection process is $150,000. With regard to length of 
time, a May of 1997 PUC consultant's report stated that it 
took six to 12 months for the PUC to complete a single 
contracting process, from development of the RFP to the 
award of the contract. This was twice as long as the DPW 
contracting process, according to the consultant. Since 
1997, the PUC has revised its financial reporting and 
auditing standards, clarified its expectations and 
approval process for professional service contracts, and 
increased and centralized its contracting staff. The 
Budget Analyst would therefore assume that the PUC 
should now handle multiple contracts efficiently and cost 
effectively. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Summary: Pursuant to Motion No. M99-38, approved by the Board of 

Supervisors on April 12, L999, the Budget Analyst was 
directed to review the subject contract in terms of the 
following three-part question. Would the subject contract (a) 
increase or decrease costs, (b) increase or decrease the 
oversight of expenditures, and (c) provide any other benefits 
or costs when compared to managing the PUCs capital 
improvement program with existing and/or new City staff? 

With regard to the firsl pari of the question as to whether the 
subject contract would increase or decrease costs, the PUC 
has not provided the Budget Analysl with Bubstantive data 
which prove the subject contract would indeed decrease 
program and/or personnel costs The Bubject contract does 
not contain performance measures which would enable the 
PUC and the Board of Supervisors to determine whether the 
subject contract had indeed decreased program costs since 
performance measures are to be determined at a later date 
by the PUC and the Contractor. Furthermore, in relation to 
personnel costs, the Budget Analysl aotes that the delay in 
staff hiring, which is one of the problems which the subject 
contract is designed to addn gnificantly affected by 

internal PUC processes. 

With regard to the second part of the question as to whether 
the subject contract would increase or decrease expenditure 
oversight, the Budget Analyst considers that the proposed 
contract would maintain, or even increase, oversight over 
expenditure, if the FTC meet- its obligation, under the terms 
of the contract, to (a) specify precisely what work it would 
require the Contractor to perform and at what cost, and then 
to (b) monitor whether or not the Contractor had met those 
performance requirements. The Budget Analyst notes, 
however, that such increased oversight would also be 
possible if the PL^C more tightly specified and measured the 
performance of its own staff, holding them accountable for 
the delivery of pre-determined outcomes. Mr. Wong advises 
that the PUC is enhancing the performance measurement 
capabilities of its staff to ensure improved expenditure 
oversight. In particular, the PUC is increasing its training 
emphasis on timely delivery of project.- against scheduled 
milestones, and is increasing its management control of 
technical staff, according to Mr. Wong. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



With regard to the third part of the question as to whether 
the subject contract would provide any other benefits or costs 
when compared to managing the PUC's capital improvement 
program with existing and/or new City staff, the Budget 
Analyst reiterates that the PUC has provided insufficient 
data on which to make such an assessment. 

In conclusion, the PUC's subject contract does not provide 
sufficient measurement criteria for the Budget Analyst to 
determine what savings, if any, are expected to result from 
hiring the Contractor. However, given the PUC's historic 
difficulties in hiring personnel and completing capital 
improvement projects, the Budget Analyst recognizes that 
contracting for program management services might be the 
only way to guarantee timely implementation of such a 
significant capital improvement program. 

As these substantive questions remain unanswered the 
Budget Analyst considers approval of the subject program 
management services contract to be a policy matter for the 
Board of Supervisors. 

Also, the Budget Analyst recommends that the Finance and 
Labor Committee direct the PUC to prepare an amended 
contract with the San Francisco Water Alliance which is for 
one year but annually renewable for each of the subsequent 
three years. Prior to annual Board of Supervisors 
consideration of whether or not to renew the contract 
through budgetary approval, the Budget Analyst 
recommends that the PUC provide the Board of Supervisors 
with audited evidence on the cost and timing benefits which 
have accrued to the City as a result of the previous year's 
contract. 

The PUC advises that it is opposed to amending the contract 
as recommended above on the grounds that (a) sufficient 
Board of Supervisors oversight could be achieved through 
reserving the contract funds, (b) annual renewal of the 
contract in late August/early September each year does not 
work well with the PUC's annual budget process which 
begins each year in October, (c) the amendment would 
represent an unacceptable deviation from the RFP, and (d) a 
one-vear contract would be less attractive to the Contractor. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

With regard to the first objection, the Budget Analyst 
believes that a requirement to formally review and renew the 
contract on an annual basis would ensure that future Boards 
of Supervisors have an opportunity to scrutinize rigorous 
performance data provided by the PUC each year. 

With regard to the second objection, the Budget Analyst 
notes that in each contract year, the Contractor would be 
involved both in projects for which funding had already been 
identified and in assisting the PUC with preparing capital 
improvement program budget proposals for the subsequent 
financial year. The Budget Analyst does not consider, 
therefore, the PUC's objection to be valid. 

With regard to the third objection, the Budget Analyst notes 
that the overall term of the contract would remain four years, 
as stated in the RFP. with the sole difference being that it 
would be sub final review and renewal each year. 

With regard to the fourth objection, the Budget Analyst notes 
that the subject contract already contain.- a clause permitting 
termination at any time and is subject to availability of 
funding. Nevertheless, the proposed Contractor has agreed 
to the specific terms of the contract. The Budget Analyst 
does not consider that his recommended amendments would 
make the subject contract any Less attractive to the proposed 
Contractor. 

Recommendations: 1. Direct the PUC to draft an amended contract with the 
D Francisco Water Alliance, which would be annually 
renewable, subject to implementation of Recommendation 
No. 2 below. 

2. Prior to annual Board of Supervisors consideration of 
whether or not to renew the contract, the Budget Analyst 
recommends that the PUC provide the Board of Supervisors 
with audited measures of the cost and timing benefits which 
have accrued to the City as a result of the previous year's 
Contractor performance and audited measures of how the 
fees paid to the Contractor are consistent with actual 
performance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

36 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Approval of the proposed program management services 
contract, as amended, is a policy matter for the Board of 
Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



APPENDIX I: CASE STUDIES 

At their September 15, 1998 presentation to the PUC Commissioners, PUC staff cited 
three highly summarized examples, based on telephone interviews, of successful public 
sector contracts which used program management services contractors to achieve 
significant savings: 

(1) The Southern Nevada Water Authority, Nevada, contracted with a program 
management services contractor at a cost of $50,000,000, or approximately 2.1 
percent, of total water supply and treatment program costs of $2,400,000,000. 
This contract achieved savings of |2 I 11 000,000, or 10 percent, through design fee 
negotiations, value engineering, and construction management services. 

(2) The City of Houston, Texas, contracted with a program management services 
contractor at a cost of $100,000,000, or approximately 9.1 percent, of total storm 
and dean water program costfl of $1,100,000,000. This contract achieved 
savings of $350,000,000, or approximately 31.8 percent, through operational 
modeling, improved project scopes of work, value engineering, and innovative 
technology. 

(3) The San Diego Wastewater Department, California, contracted with a program 
management services contractor it a cost of $120,000,000, or 7.5 percent, of total 
clean water program costs of S 1,600,000,000. The contract achieved savings of 
$310,000,000, or approximately L9.4 percent, through favorable contractor rates 
and fees, accelerated design schedules, value engineering, and constructability 
reviews. 

After the September 15, 1998 presentation, PUC Commissioner Victor G. Makras 
requested examples of programs where program management was unsuccessful. In 
response, UEB staff provided highly summarized case studies of three large programs 
managed by public sector agencies of which only one, the Eastside Reservoir 
construction project, is directly comparable to the proposed PUC capital improvement 
program. The three projects cited were: 

(1) The Eastside Reservoir construction project, managed by the Metropolitan 
Water District. Riverside County. California, which faces $250,000,000 in 
projected cost overruns. 

(2) The Boston Central Artery Program which faced a $2,500,000,000 cost overrun 
and five year delay under the management of the Massachusetts Turnpike 
Authority. A program management consultant was hired to ensure that the 
program is completed according to a revised budget and timeframe. 

(3) The Superconducting Super-Collider Program, a $4,400,000,000 particle physics 
research laboratory construction project managed by the Department of Energy 
was never completed due to cost escalation caused by ongoing changes in the 
project's scope, and unplanned Government performance audit and reporting 
requirements. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



APPENDIX II: PUC HIRING PROCESS 

Ms. Iwata of the PUC provided the following information on the time it takes 
the UEB to hire a staff member for a new or existing position, once the 
necessary requisition has been approved. Additional months prior to the 
requisition approval are spent obtaining budget approval for the new 
positions. 





Minimum 


Maximum 




Processing 


Processing 




Time 


Time 


UEB prepares requisition, job analysis questionnaire, 


4 


6 


organizational chart 






PUC Bureau of Personnel and Training (BPT) review 


2 


4 


UEB makes changes in light of BPT review 


2 


2 


Final BPT review and submission to Department of 


2 


2 


Human Resources (DHR) 






Mayor's Office approval 


2 


4 


Controller's Office approval 


1 


1 


DHR approval 


4 


26+ 


BPT notifies UEB of approvals 


1 


1 


UEB requests DHR referrals or lists 


2 


4 


UEB reviews lists, writes job postings, mails letters, 


7 


9 


waits for applicant responses, screens applicants. 






reviews resumes, arranges interviews, selects interview 






panels, develops questions, holds interviews, makes 






selection, notifies top choices, writes selection report, 






sends paperwork to BPT 






BPT processes with DHR 


3 


4 


DHR issues referral and PUC General Manager signs 


1 


1 


approval to hire 






New hire gives 14 - 30 day notice to current employer 
TOTAL: 


2 


4 


33 


68+ 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



APPENDIX HI: 



CAPITAL IMPROVEMENT PROGRAM WORKLOAD PER 
UEB TECHNICAL STAFF MEMBER 



Based on (a) annual capital improvement program budget information provided in 
Attachment I by Mr. Wong for the San Francisco Water Department (SFWD) and 
Hetch Hetchy Water and Power (HHWP), and (b) information on the total number 
of filled UEB technical staff positions provided in Attachment II by Ms. Iwata, 
Table 1 below shows the budgeted workload per UEB technical staff member 
between FY 1995-96 and FY 2000-01. The capital improvement program budgets 
for the Clean Water Program have been excluded as related engineering work for 
this program is performed by DPW engineers, according to Mr. Wong. 

Table 1: Budgeted Workload Per UEB Technical Staff Member 





SFWD & HHWP 










Capital 


Total N 


umber of 


Workload Per Filled 


Fiscal 


Improvement 


Fille 


d UEB 


UEB Technical 


Year 


Program Budget 


Technics 


1 Positions 


Position 


1995-96 


$29,849,835 




65 


$459,228 


1996-97 


11.964,539 




69 


608.182 


1997-98 


91,459,606 




73 


1,252,871 


1998-99 


40,822,000 




80 


510 


1999-00 


163,352,430 




117 


1,391 


2000-01 


150,870,700 




168* 


898,040 



* This number comprises (a) 117 filled technical staff positions as at July 1. 2000. (b) 39 currently 
vacant technical staff positions which are expected to be filled during the course of FY 2000-01, and 
(c) 12 new technical staff positions which have been approved for hire in FY 2000-01 as part of the 
FY 2000-01 budget round. 

Based on (a) annual capital improvement program expenditure information 
provided in Attachment I by Mr. Wong for the San Francisco Water Department 
(SFWD) and Hetch Hetchy Water and Power (HHWP). and (b) information on the 
total number of filled UEB technical staff positions provided in Attachment II by 
Ms. Iwata, Table 2 on the next page shows the actual workload per UEB technical 
staff member between FY 1995-96 and FY 1999-00. The capital improvement 
program expenditures for the Clean Water Program have been excluded as related 
engineering work for this program is performed by DPW engineers, according to Mr. 
Wong. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



40 



Table 2: Actual Workload Per UEB Technical Staff Member 













SFWD&HHWP 








Capital 








Improvement 


Total Number of 


Workload Per Filled 


Fiscal 


Program 


Filled UEB 


UEB Technical 


Year 


Expenditures 


Technical Positions 


Position 


1995-96 


$32,067,831 


65 


$493,351 


1996-97 


41,762,714 


69 


605,257 


1997-98 


46,478,505 


73 


636,692 


1998-99 


51,131,200 


80 


639,140 


1999-00 


65,293,341 


117 


558,063 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



sfpuc capital improvement program management services 
request for proposals 
Evaluation Score Sheet 



Attachment 
Pap,e 1 of 



Name of Firm.: 



Reviewer. 



Date: 



NOTE: The descriptions listed under each criteria establish the basis for a score of Good . 
CRITERIA WEIGHT SCORE 



l. Program Management Approach 



25 



Thorough, strong & responsive program approach 

to meet changing SFPUC needs for services & expertise. D 

Well developed, thorough, responsive & considered D 

l a year & 4 year program implementation plans. D 

Thorough, strong & specific approach to expedite program D 

& project implementation, achieve significant cost & rime savings. 

Strong, clear & precise definition of success for SFPUC program 

results & client satisfaction. 

Strong, detailed approach & recommendation of program 

management systems & tools for control & reporting. 

Thorough, strong Sc specific approach 10 specialized technical 

services for peak SFPUC workload. 

Strong, specific approach to specialized construction management 

services, reviews, partnering, dispute resolution & claims avoidance. 

Thorough, strong & effective approach to the SFPUC Program 

in Diversity, community outreach & goals for inclusion of minonnes & women. 

Strong, innovative & specific approach to full utilization and development of 

UEB &: DPW staff, strong approach to Staff Development Program & technology transfer. 



Outstanding (9) 
Superior (7) 
Good (5) 
Fair (3) 
Poor (1) 



Capability of PMC Management Team Members 



25 



Program Manager has 15 years experience and strong technical 

background in field of expertise. 

Program Manager has 5 years strong experience as responsible program 

manager on similar water and/or wastewater programs of SI billion or more. 

Program Manager & appropriate PMC management team members hold 

current California PE licenses. 

Strong, demonstrated record of success of Program Manager for PMC prime 

consultant on other similar, complex & challenging programs as SFPUC 

Other team members have 8 years strong expenence in field of expertise. 

Other team members have 5 years strong expenence in similar management 

positions on significant, complex & important public works programs as SFPUC. 

Strong management experience to high standards, top quality 

performance, cost savings & full client satisfaction. 

Strong commitment to promoting diversity & record of 

success managing diverse workforce. 

Proven record of flexible, responsive & creative problem 

solving on complex, important & challenging programs. 

Significant contribution to overall program success, accomplishment 

of client objectives on dme & within budget. 

Strong experience and skill in streamlined program management & 

implementation under public government processes and procedures. 

Unique knowledge, experience and qualifications to perform 

roles and responsibilities in SFPUC program. 







a 


Outstanding (9) 


D 


Superior (7) 


a 


Good (5) 


a 


Fair (3) 


a 


Poor (1) 



Attachment I 
fage 2 of 3 
SFPUC CAPITAL IMPROVEMENT PROGRAM MANAGEMENT SERVICES 
REQUEST FOR PROPOSALS 
Evaluation Score Sheet 



Name of Firm: 



Reviewer: 



3. Minimum Qualifications for PMC Team 

■ Annual prime or collective JV corporate revenues 
of S 100 million or more. 

■ Sufficient capability of prime and JV partners to secure appropriate 
insurance coverage. 



Date: 



a Yes 
a Yes 



□ No 

□ No 



NOTE: The descriptions listed under each criteria establish the basis for a score of Good . 
CRITERIA WEIGHT SCORE 

4. Capability of Firms on PMC Team 25 



10 years strong prime or collective JV program management 

experience on similar public works programs of S 1 billion or more. 

15 years significant experience within team on water & wastewater 

systems, operations & engineering (Prefer Prime or JV expenence). 

5 years strong management experience of prime or JV partners 

on significant, complex & important public works programs as SFPUC. 

Substantial corporate strength, reliability, financial, technical & managerial 

capability of prime or JV partners to assume prime risks & responsibilities. 

Strong expertise, depth of experience, strength & capability in 

similar management and/or technical services as proposed. 

Strong prime or JV response to program challenges & difficulties, demonstrated 

ability to adapt, recover & achieve high quality results regardless of issues. 

Strong depth and breadth in current staff levels to meet 

SFPUC needs for flexible expert services. 

High quality program results, proven success, cost & time savings, 

and high client satisfaction with services s imilar to proposed. 

Strong knowledge & understanding of California water 

issues, regulations & stakeholder concerns. 

Strong record of firm's commitment to include 

minority- & women-owned businesses on project teams. 

Significant experience with programs similar to SFPUC 

Program in Diversity. 

Strong experience with client staff development & training, 

technology & management systems transfer to clients. 

Demonstrated success with design/build projects, construcnon 

safety programs, partnering & construction cost control measures. 

References provided as requested. 



Outstanding (9) 
Superior (7) 
Good (5) 
Fair (3) 
Poor (1) 



SFPUC CAPITAL IMPROVEMENT PROGRAM MANAGEMENT SERVICES 
REQUEST FOR PROPOSALS 
Evaluation Score Sheet 



Attachment I 
Page 3 of 3 



Name of Firm: 



Reviewer. 



Date: 



NOTE: The descriptions listed under each criteria establish the basis for a score of Good 
CRITERIA. WEIGHT SCORE 
5. Approach to SFPUC Program in Diversity 15 



■ Strong, dear commitment to m3YJmi7j program opportunities 
for MBE/WBE firms, especially those new to the SFPUC 

■ Significant utilization of MBE/WBE firms in important 
program management and technical roles. 

■ Creative approaches to SFPUC Program in Diversity, to promote 
inclusion of minorities & women in program 

■ Strong, clear & specific plan to promote MBE/WBE 
growth Sc business development, transfer technology & skills. 

■ Thorough, strong & specific plan for job readiness training, 
pre-apprenticeship and paraprofessional internship training programs. 

■ Innovative, aggressive programs & activities to enhance effectiveness 
of SFPUC Program in Diversity. 

6. Understanding of SFPUC Program to 

■ Strong & thorough understanding of capital improvement 
program goals & California water issues. 

• Strong, clear understanding of unique program approach, 
financing & annual implementation plan. 

■ Strong grasp & understanding of water, power 

5c wastewater operations, facilities and capital projects. 

■ Strong understanding & response to stakeholder concerns 
Sc public accountability. 

■ Thorough, clear understanding of program financial issues. 

" Strong understanding of local labor union issues, community values 
and employee stake in program. 

■ Clear understanding of program constraints and contingencies. 

■ Strong, thorough responsiveness to Request for Proposals. 



a Outstanding (9) 

a Superior (7) 

□ Good (5) 

a Fair (3) 

a Poor (1) 



Outstanding (9) 
Superior (7) 
Good (5) 
Fair (3) 
Poor (1) 



GRAND TOTAL SCORE 



too 



The SFPUC/HRC Contract Compliance Officer will assess compliance with Nondiscrimination and MBE. W2J£ 
Utilization requirements. Failure to comply will result in disqualification from further consideration. 

NOTE: Scores are calculated by multiplying the value for the qualitative score by the weight (for example, a 
qualitative score of Superior for No. 1 Program Management Approach is 7 x 25, or 175). 



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Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Items 5 and 6 - Files 00-1049 and 00-1137 



Departments: 



Items: 



Public Utilities Commission (PUC) 
Real Estate Department (DRE) 

Item 5. File 00-1049 : Resolution approving a purchase of 
land from the Adaptec Corporation in Milpitas, Santa 
Clara County, for a purchase price of $491,319, and 
authorizing acceptance of a grant deed and an easement 
deed, and execution of a ground lease to Adaptec 
Corporation as lessee for a term of twenty-five years at an 
initial rent of $26,557 per year. 



Item 6, File 00-1137 : Resolution authorizing the General 

Manager of the Public Utilities Commission to execute 
two agreements with the Santa Clara Valley Water 
District on behalf of the City and County of San 
Francisco. 



Description: 



Item 6. File 00-1137 : On January 25, 2000. the Public 
Utilities Commission (PUC) approved two agreenv 
between the PUC and the Santa Clara Valley Water 
District (SCVWD) to jointly design, construct, and operate 
an Intertie Pipeline and Pump Station to allow transfer of 
water between the two agencies' wal ms during an 

emergency or .shutdown for planned maintenance. The 
Intel tie Pipeline and Pump Station would be located in 
Milpitas. Santa Clara County. 

The subject resolution would: (1) authorize the two 
•ments hetween the PUC and the SC\~WD entitled. 
"Development of an Intertie Facility.'' and "Long-Term 
Operation and Maintenance of the Intertie:" and 
authorize the General Manager of the PUC to execute 
these agreements. 

The Intertie Pipeline and Pump Station Project would 
include the construction of a 40 million gallons per day 
pumping station, chemical treatment facilities, a 
connecting 42-inch pipeline, and appurtenances in the 
City o( Milpitas to connect Bay Division Pipelines No. 3 
and No. 4 to the SC\~WD water transmission facilities. 
This project would also require the purchase of property 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Location: 

Owner and Seller: 
Size of Lot: 

Purchase Price: 



in Milpitas from the Adaptec Corporation and a lease 
renegotiation with Adaptec Corporation for existing PUC 
property. (See Item 5, File 00-1049 below). 

According to Mr. Gary Dowd of the PUC, the subject 
agreements between the PUC and the SCVWD state that 
the two entities will share equally the total cost of the 
project, in addition to the cost for preparation of contract 
documents, construction costs and the cost for the 
purchase of any required property. 



Item 5. File 00-1049 

Purchase Agreement 

Lot 15, Parcel No. 086-42-015 and Lot 16, Parcel No. 086- 
28-016, Milpitas, Santa Clara County (See Attachment I, 
provided by the PUC). 

Adaptec Corporation 

(a) Lot 15: 20,657 square feet 

(b) Lot 16: 7,496 square foot easement across lot 



Lot 15 


$431,319 


Easement across Lot 16 


60,000 


Subtotal 


$491,319 


Closing Costs 


3,200 


Total 


$494,519 



According to Mr. Dowd, the PUC and the Santa Clara 
Valley Water District will share the cost of purchasing the 
land and easement, each paying $247,259.50, for a total 
cost of $494,519. Therefore, the PUC's share of the total 
purchase price of $494,519 will be $247,259.50. (See 
Comment No. 2 below). However, Mr. Dowd advises that 
the City will retain full ownership of Lot 15 and the 
easement across Lot 16. According to Mr. Phil Dela Cruz 
of the PUC, SCVWD has agreed to pay 50 percent of the 
purchase price for Lots 15 and 16 and yet allow the City 
to retain full ownership of Lot 15 and the easement across 
Lot 16 to simplify the approval process. Mr. Dela Cruz 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



AQ 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Purchase Price 
Per Square Foot: 



advises that the City and the SCVWD will jointly own and 
jointly fund the Pump Station and related facilities to be 
located on Lots 15 and 16. 





Square Feet 


Cost/Square Foot 


Total Cost 


Lot 15 


20,657 


$20.88 


$431,319 


Lot 16 Easement 


7.496 


8.00 


60,000 


Total 


28,153 


$28.88 


$491,319 



Source of Funds: 
Description: 



PLC Project Appropriation for Emergency Inn-rue Project 

The subjecl resolution would authorize: (a) the purchase 
of land from the Adaptec Corporation to allow the PUC 
and the SCVWD to construct the [ntertie Pipeline and 
Pump Station; and (b) B continuing lease of land to the 
Adaptec Corporation (see below for discussion of lease). 

According to Mr. Dowd. the Adaptec Corporation 
currently owns Lot L5 and Lot 16, the property adjacent 
to the PUC Bay Division right of way for Pipelines No. 3 
and No. 4. (See map on Attachment I). The subject 
resolution would allow the PIT and the SCVWD to 
purchase jointly a portion of Lot L5 (approximately 80 
percent of the lot) for the purpose of constructing a Pump 
Station. In addition, the subject resolution would 
authorize the PUC and the SC\WD to purchase an 
easement for underground pipelines across the rear of Lot 
16 to the adjacent Milpitas Pumping Station No. 2, to 
connect PUC facilities with those of the SCVWD. The 
purchase price for Lot 15 would be $431,319 and the price 
for the easement across Lot 16 would be $60,000, for a 
total purchase price of $491,319. 

As previously stated, the PUC and the Santa Clara Valley 
Water District will share the cost of purchasing the land 
and easement, each paying $247,259.50, for a total cost of 
1,519. Mr. Dowd advises that the City will retain full 
ownership of Lots 15 and the easement across Lot 16. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Budget: 



Comments on 
Purchase Agreement: 



The summary budget for the Milpitas Intertie Pipeline 
and Pump Station Project is as follows: 



Construction Contract with Homer J. Olsen 
(See Attachment II, provided by the PUC) 


$9,146,220 


Contingency (10%) for Const:- iction Contract 


914,622 


PUC Inspection and Engineering Support 


870,000 


Land Purchase and Easement 


491,319 


Closing Costs for Land Purchase 
(See Comment No. 2 below) 


3,200 


Total 


$11,425,361 



Attachment III, provided by the PUC, contains details to 
support the above summary budget for the subject project. 



1. Mr. Ken Chopping of the Department of Real Estate 
(DRE) states that the DRE appraised the subject property 
to be purchased and determined that the total purchase 
price of $491,319, or approximately $20.88 per square foot 
for Lot 15 and $8 per square foot for the easement 
through Lot 16, represents fair market value. According 
to Mr. Chopping, the DRE based its appraisal on the 
recent sale of comparable property in the vicinity. Mr. 
Chopping advises that the owner of the subject property 
has agreed to this process, however, Mr. Chopping 
anticipates that a formal property acquisition agreement 
will not be finalized until the end of Julv 2000. 



2. The subject resolution approves a total price of 
$491,319 for the purchase from the Adaptec Corporation 
of a portion of Lot 15 and an easement across Lot 16. 
However, according to Mr. Chopping, this purchase would 
include an additional $3,200 for title insurance and 
standard closing costs, resulting in a total purchase cost 
of $494,519. Therefore, the subject resolution should be 
amended to increase the total purchase price by $3,200, 
from $491,319 to $494,519. 

3. According to Mr. Leroy Gullette of the PUC, and as 
stated in Attachment II, the PUC awarded a contract of 
$9,146,220 to the firm Homer J. Olsen for the 
construction of the subject Intertie Pipeline and Pump 
Station on June 27, 2000. Mr. Gullette advises that 
Homer J. Olsen was the lowest responsive bidder of the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Si 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



following three bids the PUC received for the subject 
construction project: 



Bids Received 


Bid Amount 


Homer J. Olsen 


$9,146,220 


Mitchell Engineering 


$9,256,118 


S.J. Amoroso 


$11,258,915 



According to Mr. Gullette, the Human Rights Commission 
(HRC) has certified that Homer J. Olsen has met 
MBE/WBE/LBE subcontracting goals. Attachment II. 
provided by the PUC, provides additional details on 
competitive bidding process for the subject project. 

\ According to Mr Gullette, the PUC plans to begin 
miction of the proposed Interne Pipeline and Pump 
Station on August L, 2000. Mr Gulletfc 'hat the 

full construction period will require 18 months and be 
completed by -January 1. 2002, as stated in Attachment II. 
However. Mr. Gullette reports that the PUC plans partial 
completion of the project and the ability to deliver water 
by April 1 2001, or eight months after the commencement 
date 

5 As noted above, construction of the Intertie Pipeline 
and Pump Station is scheduled I n August 1. 2000. 

Mr. (Juliette advises that there is a provision in the 
agreement with the contractor. Homer J. Olsen. that will 
penalize the contractor monetarily if the contractor does 
not finish the work necessary to deliver water by April 1. 
2001, as stated in Attachment II. However, if the 
contractor is not given formal Notice to Proceed by July 
31. 2000, which requires the approval of the Board of 
Supervisors, the contract states that these liquidated 
damages imposed on the contractor will be waived. 

6. The PUC approved the subject land purchase on May 
23, 2000 (Resolution No. 00-0136). According to Mr. 
Dowd. the Santa Clara Valley Water District has already 
approved this land purchase. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Location: 

Purpose of Lease: 
Lessor: 

Lessee: 



Lease 

Portion of Parcel 111C of Bay Division Pipeline No. 3 and 
No. 4 right of way, Milpitas, Santa Clara County 

Paved parking lot 

City and County of San Francisco through the Public 
Utilities Commission (PUC) 

Adaptec Corporation 



No. of Square Feet and 

Rent Per IVJonth: 50,965 square feet at $2,213 per month, or $0,043 per 

month per square foot ($26,557 annually). 



Annual rent Payable by 
Adaptec Corporation 
to the City: 



Increase (Decrease) 
In Rent: 



Term of Lease: 



$26,557 annually. This annual rent would be adjusted 12 
months after the commencement date of the lease, and 
then readjusted every 12 months thereafter, by the 
annual percentage increase in the Consumer Price Index 
(CPI). In addition, the base rent would be adjusted to 
equal the fair market rental of such property every five 
years. This adjustment would be determined by the PUC's 
Bureau of Commercial Land Management, using a 
market survey approach, in consultation with the 
Department of Real Estate. The adjustment would take 
into account: (a) land values in the general vicinity of 
Milpitas, (b) the location and size of the premises covered 
by leases of comparable space, and (c) the duration of the 
comparable leases. The annual base rent on or after the 
adjustment date cannot be less than the annual base rent 
in effect immediately prior to the adjustment date. 

Under the proposed lease, the annual rent in the subject 
PUC property would remain the same, at $26,557 
annually (See Description below for details). 

The proposed lease between the PUC and the Adaptec 
Corporation would commence upon the close of escrow of 
the land purchase discussed above and would terminate 
25 years after the commencement date, approximately in 
August of 2025. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Right of Renewal: 
Description: 



Comments on 
Proposed Lease: 



None 

Aa previously stated, the Adaptec Corporation currently 
owns Lot M and Lot 16, the property adjacent to the PUC 
Bay Division right of way for Pipelines No. 3 and No. 4. 
(See map on Attachment I). Since 1996, the Adaptec 
Corporation has also held a 10-year lease from the PUC 
for this right of way property, which the companv 
currently uses to provide a paved parking lot to its 
employees. The Adaptec Corporation currently pays to the 
PUC $2,213 per month ($26,557 annually) for this lease, 
which will expire on June 30, 2006. 

The subject resolution would authorize a new 25-year 
lease between the PUC and the Adaptec Corporation for 
the right of way property, based on the same terms and 
conditions of the current Lease According to Mr. Dowd. 
the proposed lease is part of the land purchase 

ement discussed above and was included in the 
negotiations in <>rder to allow the Adaptec Corporation to 
maintain its current level of parking after the PUC and 
Santa Clara Valley Water District purchase the majority 
of Lot 1 *> from the Adaptec Corporation 

Under the proposed 25-year Lease, the rent paid by the 
Adaptec Corporation to the PUC would continue at 
current rate per mont 7 annually), with 

adjustments every 12 months based on annual percentage 
increases in the Consumer Price Index (CPI) and 
adjustments every five years for changes in the fair 
market rental value of the subject property. According to 
Mr. Dowd. the Adaptec Corporation's current 10-year 
lease with the PUC would be rendered null and void upon 
approval of the subject 25-year lease between the Adaptec 
Corporation and the PUC. 

1. Mr. Dowd reports that the subject PUC right of way 
property to be leased to the Adaptec Corporation is 
adjacent to the Lessee's property and thus has no use to 
any other property owner and is not available for 
individual development. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

54 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



2. According to Mr. Chopping of the DRE, the proposed 
annual rental rate of $26,557 reflects the current fair 
market rental rate for the subject rental property. Mr. 
Chopping reports that DRE appraised the subject rental 
property in 1996. when the original lease with the 
Adaptec Corporation was negotiated, based on the worth 
comparable properties in the vicinity. The base rent in 
1996 for the original lease was $2000 per month, or 
$0,039 per square foot per month. Since 1996, the base 
monthly rent has increased by $213, or 10.7 percent, from 
$2000 per month to $2,213 per month, or $0,043 per 
square foot per month. Annually, the rent has increased 
by $2,557, from $24,000 to $ 26.557 per year. According to 
Mr. Chopping, these increases are commensurate with 
annual percentage increases in the Consumer Price Index 
(CPI). as required by the original lease. As previously 
noted. Mr. Dowd advises that the proposed new 25-year 
lease also contains provisions for revaluation and rent 
adjustments for the subject property lease. 

3. The PUC approved the subject lease on May 23, 2000 
(Resolution No. 00-0136). 

4. The benefit of the Intertie Pipeline and Pump Station 
project will be to allow transfer of water between the 
City's Public Utilities Commission and the Santa Clara 
Valley Water District water systems during emergencies 
or shutdowns for planned maintenance. Because the 
proposed resolutions are necessary elements of the project 
previously approved by the Board of Supervisors in the 
FY 2000-2001 budget, the Budget Analyst recommends 
approval of both resolutions. 



Recommendations: Item 5, File 00-1049 



1. Amend the subject resolution to increase the total 
purchase price by $3,200, from $491,319 to $494,519. in 
accordance with Comment on the Purchase Agreement 
No. 2 above. 

2. Approve the proposed resolution, as amended. 
Item 6. File 00-1137 

Approve the proposed resolution. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

55 



EXHIBIT A 

DIAGRAM OF THE PREMISES 



Attachment 



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5=11^5 AC 

>"!riPCL/5? s. PREMISES 

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(Approximately 50,806 
square feet) 



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4««.6« 



PARCEL 1 

3-78 AC. 

29 



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236 



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Jo 2.C7 AC. 

E 30 



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CiTy OF" MlU 



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8SSi008\237C12.1 



LEASE TO ADAPTEC, INC. FOR PARKING 

POR. OF PAR. 111C, BDPL NOS. 3& 4 RW 

MILPITAS, SANTA CLARA COUNTY 



Source: Public Utilities Commission 




CITY AND COUNTY OF SAN FRANCISCO 
PUBUC UTILITIES COMMISSION 
UTILITIES ENGINEERING BUREAU 



W1UJE L BROWN. JR. 
MAYOR 



JOHN P. MULLANE 
GENERAL MANAGER 



Attachment II 
Page 1 or 2 



E. DENNIS NORMANDY 
PRESIDENT 
VICTOR G. MAKRAS 
VICE PRESIDENT 
FRANK L. COOK 
ANN MOLIER CAEN 
ASHCK KUMAR 8HATT 



MICHAEL E. QUAN 
UE3 Manager 



SAN FRANCSCC 

WATER OEPAf.rMENT 



HETCH HE7CHY 
WATER AND POWER 



SAN FRANCISCO 

CLEAN WATER PROGRAM 



MEMORANDUM 

TO: m Emilie Neumann, Budget Analyst 

FROM: Leroy Gullette, Project Engineer <^-o 

DATE : Thursday, July 1 3 , 2000 

SUBJECT: Bidding Process, Deadline, Schedule, and Environmental Determination 
for the SFWD/SCVWD Intertie Pipeline and Pump Station, WD-2295 

Competitive Bidding Process/Advertisement of Project 

The contract was advertised through plan rooms, national journals, outreach program, and phone 
effort by PUC personnel. There were in excess of 150 Plan holders of which a minimum of 12 
were identified as general contractors able to bid on a contract of this complexity and cost. 

Bids Received and Awarded 

Three bidders and their respective total bids are as follows: 

Homer J. Olsen 59,146,220 

Mitchell Engineering $9,256,118 

S. J. .Amoroso 511,258,915 

On June 27, 2000 the Public Utilities Commission awarded the project to the lowest responsive 

bidder, Homer J. Olsen for an amount of 59,146,220. The project MBE/WBE goals were set at 

1 1% and 6% respectively. Homer J. Olsen met the MBE' WBE goals by listing subcontractors as 

follows: 



Subcontractor 


MBE/WBE | Amount 


Percentage 


NCCI, Inc 


WBE I 5530,000 


6.59 


Vargas & Esquivel 


WBE | 524.400 


0.30 


Esquivel Grading and 
Pavins 


MBE 


586.400 


1.07 


Anco Iron & 
Construction 


MBE 


5122,000 


1.52 


Van Hook Electric 


MBE | 5839,720 


9.18 



Total MBE is 11. 



Total WBE is 6.89% 



UTILITIES ENGINEERING BUREAU 
1155 MARKET STREET. 5TH FLOOR • SAN FRANCSCO. CALIFORNIA 94103 • (-115) 554-0702 



Attachment II 
Page Z ot l 



Deadline of July 31, 2000 for Notice to Proceed 

In the event that the Notice to Proceed is not given to the conn-actor by July 31, 2000, which 
requires approval by the Board of Supervisors of the Land Purchase, Construction Agreement, 
and Long Term Maintenance Agreement, there is a provision within the specifications that will 
waive the liquidated damages of 55,000 per day imposed on the contractor to finish the work 
necessary to deliver water by April 1, 2001. This date was set through agreement with Santa 
Clara Valley Water District so that they could proceed with necessary seisnuc upgrades needed 
at their Penitencia Treatment Plant. 

If the liquidated damages are waived as described above, the City and County of San Francisco 
will have to negotiate with the contractor construction constraints that would cost approximated 
5150,000. 

Project Schedule 

Construction of the Intertie Pipeline and Pump Station is scheduled to start on August 1, 2000. 
Substantial^ompletion and the ability to deliver water is scheduled for S months later on April 1, 
2001. The full construction period is 18 months and completion of construction is anticipated on 
January 1, 2002. 

Environmental Determination 

The City and County of San Francisco; Department of City Planning has adopted and issued on 
November 24, 1999 a Final Negative Declaration, with mitigation, for this project after review 
under the California Environmental Quality Act guidelines. 



Cc: Michael Carlin, Mike Quan, Carlos Jacobo, Phil Dela Cruz, Dennis Huey, Albert Eng, John 
Hetzner 



UTILITIES ENGINEERING BUREAU 




CITY AND COUNTY OF SAN FRANCISCO 
PUBLIC UTILITIES COMMISSION 
UTILITIES ENGINEERING BUREAU 



WILLIE L. BROWN. JR. 
MAYOR 



JOHN P. MULLANE 
GENERAL MANAGER 



Attachment III 
Page 1 of 5 



E. DENNIS NORMANDY 
PRESIDENT 
VICTOR G. MAKRAS 
VICE PRESIDENT 
FRANK L. COOK 
ANN MOLLER CAEN 
ASHOK KUMAR BHATT 



MICHAEL E. QUAN 
UE3 Manager 



SAN FRANCISCO 
WATER DEPARTMENT 



HETCH HETCHY 
WATER AND POWER 



SAIM FRANCISCO 

CLEAN WATER PROGRAM 



MEMORANDUM 

TO: Emilie Neumann, Budget Analyst .. 

FROM: . Leroy Gullette, Project Engineej^~^7 

DATE : Thursday, July 1 3 , 2000 

SUBJECT: Budget Summary for SFWD/SCVWD Intertie Pipeline and Pump Station, WD-2295 

Summary Budget 

The contract cost is a total of $1 1,422,161 which includes $9,146,220 for the construction cost, 
$914,622 for contingencies, $870,000 for inspection and engineering support, and $491,319 for 
the land purchase and easements. 

Of the $1 1,422,161 estimated cost of the project, Phase I will be funded by the $6.1 million 
included in the SFPUC current fiscal year budget and $3.0 million in the FY 00/01 budget. 
Phase II will be funded by $2.4 million in the SCVWD budget, which is in addition to the $7.95 
million cost already incurred by SCVWD in the construction of the Milpitas Pipeline (an integral 
part of this project). 

The schedule of bid prices from all bidders is attached for your reference. 

The Project Manpower Plan for inspection and engineering support is attached which totals 
$846,059. The balance of the $870,000 is for project management and special inspection as 
necessary during the construction. 



Attachments: 

Schedule of Bid Prices (3 pages) 

Project Manpower Plan (1 page) 



Cc: Michael Carlin. Mike Quan. Carlos Jacobo. Phil Dela Cruz, Dennis Huey, Albert Eng, John 

Hetzner 



UTILITIES ENGINEERING BUREAU 
1155 MARKET STREET. 5TH FLOOR • SAN FRANCISCO CALIFORNIA 94103 • (415) 554-0702 



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II- 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Item 8 - File 00-1130 



Department: 
Item: 



Location: 



Purpose of Lease: 



Lessor: 



Lessee: 



.Airport 

Resolution approving the North Terminal Concourse 
Newsstand Lease between Calstar Retail, Inc. and the 
City and County of San Francisco, acting by and through 
rport Commission. 

North Terminal of the Airport 

The proposed lease would provide approximately 523 
square feet of space in the North Terminal to operate a 
newsstand selling newspapers, periodicals, books, candy- 
bars, and sundry- items. 

City and County of San Francisco, acting by and through 
its Airport Commission. 

•r Retail, Inc., an affiliate of DelStar Group, a 
■ vrtified Disadvantaged Business Enterprise. 



No. of Sq. Ft. and 

Monthly Rental Revenues 

Payable by Calstar Retail 

Inc. to the Airport: Approximately 523 square feet of space in the North 

rminaJ to operate a newsstand. The total rental 
revenues to be paid by Calstar Retail. Inc. to the Airport 
based on the Minimum Annual Guarantee would be 
approximately $81.62 per square foot per month, or 
approximately $42,688 per raotr 256 annually). 



Annual Rent 
Payable by Calstar 
Retail, Inc. to the 
Airport: 



The proposed lease would require Calstar Retail, Inc. to 
pay to the Airport the greater of a Minimum Annual 
Guarantee of $512,256 for each year of the five year lease 
term (adjustable by Consumer Price Index increases), or 
the sum of the following variable percentage scale: 

(a) 12 percent of gross revenues achieved up to and 
including $1,000,000: plus 

(b) 14 percent of gross revenues achieved from 
$1,000,000.01 up to and including $1,500,000: plus 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

7? 






Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

(c) 16 percent of gross revenues achieved over 
$1,500,000. 

According to Mr. Jon Ballesteros of the Airport, Calstar 
Retail, Inc. estimates that it will earn gross revenues of 
$1,100,000 during the first year of the subject lease. If 
Calstar Retail, Inc. earns that estimated gross revenue, it 
would pay rent to the Airport in the amount of the 
Minimum Annual Guarantee of $512,256 because that 
would be greater than the amount payable under the 
variable percentage scale outlined above. Under the 
variable percentage scale, gross revenues of $1,100,000 
would only generate $134,000 in rental revenues based on 
(a) 12 percent of $1,000,000, and (b) 14 percent of 
$100,000. Variable percentage scale rental revenue in the 
amount of $134,000 would be $378,256 less than the 
Minimum Annual Guarantee. 

Term of Lease: The proposed lease would commence on October 1, 2000. 

The lease would be for a five year period, terminating on 
September 30, 2005. 

Right of Renewal: None 

Utilities and Janitor 

Provided by Lessor: The Lessee pays for the costs of all utilities and janitorial 

services. 

Description: On May 2, 2000, the Airport Commission adopted a 

resolution awarding the North Terminal Concourse 
Newsstand Lease to Calstar Retail, Inc. (Resolution No. 
00-0158). According to Mr. Jon Ballesteros of the Airport, 
the Airport selected the firm Calstar Retail, Inc. through 
a formal Request for Proposals (RFP) process, which was 
advertised in minority and community newspapers and 
the City's Purchasing Departments' Bids and Contracts 
weekly newsletter. An additional advertisement was 
placed in the Airport's Official Newspaper. The RFP 
required rental payments in the amount of either (a) a 
Minimum Annual Guarantee of $150,000. or (b) the 
variable percentage scale outlined above, whichever was 
the greater. Of the five bidders who submitted proposals. 
CalStar Retail. Inc. proposed the highest Minimum 
Annual Guarantee of $512,256 annually. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Tenant 
Improvements: 



Comment: 



Calstar Retail, Inc. would be required to invest a 
minimum of $150 per square foot to refurbish, redecorate, 
and modernize the interior and exterior of the subject 
retail lease space. This represents an investment of 
$78,450 for the 523 square foot newsstand. Upon 
receiving adequate evidence of Calstar Retail. Inc.'s 
construction costs, the Airport would issue a rent credit 
equal to $75 per square foot, or 50 percent of the 
minimum tenant improvement cost, over a period to be 
determined by the .Airport Director. According to Mr. 
Ballersteros, the Airport Commission approved the 
reimbursement of 50 percent of the minimum tenant 
investment cost as part of its efforts to encourage 
Disadvantaged Business Enterprise participation. 

Calstar Retail. Inc. currently has five leases with the 
.\irport, comprising three newsstand leases, one candy 
cart/kiosk lease, and an apparel boutique lease. Calstar 
Retail. Inc. also is a subtenant to a North Terminal 
concession run by Host International. Inc. However, the 
current concessionaire for the North Terminal Newsstand 
• is Aarons' Concessions, Inc. which pays the Airport 
an annual rent of the higher of (a) a Minimum Annual 
Guarantee of $183,326, or (b) 20 percent of gross 
revenues. Based on current annual gross revenues of 
$1,123,923, the rent payable by Aarons' Concessions, Inc. 
is $224,785, or $287,471 less than the Minimum Annual 
Guarantee of $512,256 which would be payable by Calstar 
Retail. Inc. 



Recommendation: 



Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



1L 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Item 10 -File 00-01142 

Department: 

Item: 



Amount: 
Source of Funds: 
Description: 



Superior Court 

Hearing to consider release of reserve of $254,000 
for the Trial Courtc for indigent defense conflicts 
counsel. 

$254,000 

General Fund Reserve 

In March of 2000, the Board of Supervisors 
approved a $508,000 supplemental appropriation 
ordinance (File 00-0271) for increased costs for the 
Indigent Defense Program private attorneys based 
on an increased caseload. Of the $508,000 
approved, the Finance and Labor Committee placed 
$254,000 on reserve, because the Trial Court was 
unable to provide a detailed accounting of the 
number of hours or the amount of private attorney 
billings that were not paid in FY 1998-99 and thus 
were held over to be paid from the requested FY 
1999-2000 supplemental appropriation. 

The proposed request is for release of this 
remaining $254,000 for the Trial Court's Indigent 
Defense Program private attorney expenses. 

Ordinarily, the Public Defender's Office provides 
defense attorneys to indigent individuals who have 
been charged with a crime. If the Public Defender's 
Office determines that a conflict of interest would 
result if the Public Defender were to provide the 
defense attorney, the Superior Court appoints a 
private defense attorney through the Superior 
Court's Indigent Defense Program. The Superior 
Court pays the fees for such private defense 
attorneys at a predetermined rate. 

Although the San Francisco Superior Court 
receives most of its funding through the State Trial 
Court Funding Program, the Indigent Defense 
Program is funded by the City's General Fund. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



Comments: 1. Mr. Neal Taniguichi of the Superior Court 

advises that the increased costs for private defense 
attorneys resulted from the increased number of 
indigent individuals assigned private defense 
attorneys through the Indigent Defense Program. 
According to Mr. Taniguichi, one of the primary 
reasons for the increased caseload was because 
from March of 1998 until October 1, 1999, the 
Public Defender's Office provided attorneys in only 
three of the four courtrooms that held arraignment 
bearings, due to insufficient staffing for the Public 
Defender's Office. Therefore, the Superior Court 
had to assign private defense attorneys through the 
Indigent Defense Program to indigent individuals 
who had arraignment hearings in the additional 
courtroom that did not have attorneys from the 
Public Defender's Office. 

According to Mr. Taniguichi. as of October 1. 1999, 
the Public Defender's Office was able to hire nine 
additional md one prr. 

investigator) and to provide attorneys for indigent 
individuals for all the arraignment courtrooms. 
Therefore, since October 1. L999, the Indigent 
Defense Program has only needed to provide 
private defense attorneys to indigent individuals if 
the Public Defender determines that a conflict of 
interest exisl 

2. Mr. Taniguichi advises that Indigent Defense 
Program expenditures lag approximately three 
months behind increased caseload assignments due 
to delays in private attorney billings, approval and 
reimbursement. Therefore, the additional costs that 
were incurred from these private defense attorneys 
by the Superior Court between March of 1998 and 
October of 1999. had to be paid primarily from FY 
1999-2000 budgeted funds. In FY 1999-2000, the 
Superior Court received a total of So. 9 million for 
indigent defense attorneys, juvenile attorney fees, 
private investigator fees, witness fees and other 
related expenses. The Budget Analyst notes that 
approximately 78 percent of this budget, or 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

approximately $4.6 million, is used to pay for the 
indigent attorney fees. In addition, as discussed 
above, the Superior Court received a supplemental 
appropriation of an additional $508,000, of which 
$254,000 was placed on reserve, which is the 
subject of the proposed request. Therefore, the total 
appropriation for these related purposes in FY 
1999-2000 was $6,408,000 ($5.9 million original 
appropriation plus $508,000 supplemental 
appropriation). 

3. Mr. Taniguichi provided documentation of the 
following indigent conflicts attorney, juvenile 
attorney, investigator, expert witness and related 
expenditures that have already been paid by the 
Controller's Office for FY 1999-2000: 

July, 1999 $776,108 

August 859,295 

September 719,973 

October 490,137 

November 602,984 

December 475,157 

January, 2000 287,971 

February 559,403 

March 605,169 

April 507,038 

May 275,663 

Total Amount Paid To Date $6, 158,898 

Additional Amount Documented 262,008 

(See Comment No. 4) 

Total FY 1999-2000 Expenses $6,420,906 

Total Amount Previously Appropriated 

And Released $6,154.000 

Balance Remaining $266,906 

4. Ms. Cynthia Quevado of the Controller's Office 
advises that the Superior Court has submitted a 
total of an additional $139,648 of private attorney 
billings to the Controller's Office that cannot be 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

paid by the Controller's Office, because the 
Superior Court does not have funds to pay such 
outstanding bills. The Superior Court has also 
provided documentation of an additional 
approximately $122,360 of billings that the Court 
has not yet submitted to the Controller's Office for 
payment, that came in during May of 2000, for 
total additional expenditures of $262,008. 
Therefore, the Budget Analyst recommends 
ipproval of the requested release of $254,000 to 
pay such '>ut> landing pr; rney and related 

bills 

5. The Budget Analyst notes that even with the 
release of the requester 00, the Superior 
Court would still not have sufficient funds to pay 
$12,906 of documented outstanding bills from FY 
1999-2000. In addition, based on the Budget 
Analyst's inquiries, the Superior Court advises that 
there is another approximately $1,000,000 of 
outstanding private attorney bills for indigent 
defense and related expenses that the Court 
received in June of 2000. that have not yet been 
processed but still need to be paid. According to Mr 
Taniguichi, because the FY 1999-2000 funds have 
been exhausted, these FY 1999-2000 expenditures 
will have to be paid from the Superior Court s FY 
jot iii-iil budget. 

6. The Budget Analyst notes that the Superior 
Court will receive $6,546,000 to pay for indigent 
defense attorneys, private investigators and related 
cost.- in FY 2000-01. However, this increased 
amount includes rate increases averaging 11 
percent for the private attorneys and 
approximately 29 percent for the private 
investigators for cases assigned by Superior Court 
Judges as of July 1, 2000. As of the writing of this 
report, Mr. Taniguichi could not predict whether 
the Superior Court will have sufficient funds to pay 
for the additional approximately $1 million of 
expenditures from attorney bills accrued in FY 
1999-2000. from the FY' 2000-01 budgeted funds. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

78 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

7. During the FY 2000-01 budget deliberations, a 
preliminary analysis conducted by the Budget 
Analyst indicated that the private court appointed 
counsel cases are already higher than the average 
costs per case of the Public Defender's Office for 
comparable cases. Based on this factor, combined 
with the significant increase in private attorney 
billings that occurred in June of 2000, that was not 
anticipated, the Budget Analyst continues to 
recommend that the City conduct an analysis of the 
comparative costs of creating a second Public 
Defender's Office in lieu of using private counsel for 
all conflict of interest cases. Such second Public 
Defender's Offices have been established in other 
counties in California such as San Diego and 
Contra Costa counties. 

Recommendation: Approve the proposed requested release of 

$254,000. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Item 12 - File 00-0852 

Department: Library 

Item: Ordinance (a) approving a Memorandum of Understanding 

(MOU), dated as of July 1, 1999, between the San Francisco 
Public Library and the Friends and Foundation of the San 
Francisco Public Library- ("Friends and Foundation') for 
use of space in the Main Library building for the 
performance of Library-related services, generation of 
revenues fin- Library Department purposes, and assurance 
of private funds to provide support on an ongoing basis for 
the San Francisco Public Library system: and (b) amending 
Article XIII. Chapter K). Part One of the San Francisco 
Municipal Code ("Administrative Code") by adding section 
10.116-6 thereto, authorizing the City Librarian, or his or 
her designee, to accept and expend any individual gifts 
from the Friends and Foundation of a value of $25,000 or 
less; and (c) authorizing and approving certain atonements 
to be made between the City and the Friends and 
Foundation as contemplated by such MOU, including a 
lease of office and gifl ad an agreement giving 

the Friend.- and Foundation the right to manage the 
meeting rooms, auditorium, and other space for private 
functions and special events and to charge fees for such 
uses. 

Description: The proposed ordinance would approve (a) a Memorandum 

of Understanding (MOl*) between the City and the Friends 
and Foundation of the San Francisco Public Library, which 
would include the lease of Library space to be used for 
Friends and Foundation office -pace and a gift shop, (b) a 
Marketing and Events Management Agreement between 
the City and the Friends and Foundation, which is Section 
3 of the subject MOU, for marketing and events 
management of space for private functions and events, and 
(c) an amendment to the Administrative Code to authorize 
the City Librarian to accept and expend any individual gifts 
from the Friends and Foundation of S25.000 or less without 
receiving Board of Supervisors approval. 

The proposed MOl" would be effective retroactively to July 
1, 1999. and would expire on June 30, 2005, a six-year 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



period. 1 Under the proposed MOU, the Friends and 
Foundation would provide a minimum of $200,000 per year 
of private funding to the Library for library-related 
projects. The Library would permit the Friends and 
Foundation to use approximately 2,686 square feet for 
office space, and approximately 300 square feet for a gift 
store. In exchange, the Friends and Foundation would pay 
rent of $1 per year rent for the office space and $1 per year 
rent for the gift store space. 

The proposed Marketing and Events Management 
Agreement, which is described in Section 3 of the subject 
MOU, would be ratified retroactively for the period from 
July 1, 1999 through June 30, 2000. For the one-year period 
from July 1, 1999 through June 30, 2000, the Library 
provided space in the Main Library for private functions 
and non-City events. According to Mr. George Nichols of the 
Library, the Library determined fees for special events, and 
received approximately $50,600 in revenue generated by 
those fees in FY 1999-00. $60,000 was included in the FY 
1999-00 Library budget to pay the Friends and Foundation 
an annual events management fee, which is $9,400 more 
than the $50,600 in revenues generated. According to Mr. 
Nichols, the consultant hired by the Library to study the 
Marketing and Events Management Program 
recommended to the Library Commission that the Program 
not be continued as it was currently structured. Although 
the proposed MOU provides that the Friends and 
Foundation has the option to extend the subject Agreement 
for a period of up to one year to June 30, 2001, subject to 
City approval and appropriation of funds by the Board of 
Supervisors, Mr. Nichols states that the Friends and 
Foundation did not exercise that option with the period 
required by the MOU. As a result, the Agreement 
terminated as of June 30, 2000. 

The proposed amendment to the Administrative Code 
would authorize the City Librarian to accept and expend 
individual gifts of cash, goods or services, valued at $25,000 
or less, from the Friends and Foundation without prior 
approval from the Board of Supervisors. Under the 



1 According to Mr. George Nichols of the Library, the proposed MOU is retroactive because of an 
extended negotiating process with Friends and Foundation, which had recently merged into one 
organization, as noted in Comment No. 1, and because of administrative delays. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

proposed amendment, the City Librarian would submit an 
annual written report to the Controller and the Clerk of the 
Board of Supervisors listing the gifts accepted from the 
Friends and Foundation and summarizing how the City 
Librarian expended such gifts. 

Comments: 1 According to Mr. Nichols, the Friends and Foundation of 

the San Francisco Public Library is a volunteer 
organization governed by a Board of 30 volunteer members, 
dedicated to fundraising to support the Library. The 
Friends and Foundation, a nonprofit organization, was 
formed out of the July 1, 1999 merger of two organizations 
formerly known as the Friends of the San Francisco Public 
Library (Friends") and the Library Foundation of San 
Francisco ("Foundation"). The Friends was a nonprofit 
organization founded in 1961 and dedicated to raising 
funds for Library programs. The Foundation was a 
nonprofit organization founded in 1991 to raise private 
funds to pay for Library furnishings, fixtures, and project 
-upport. The Friends have been operating under an MOU 
with the City and County of San Francisco dated February 
23, 1996, in which it has been providing the Library with 
supplemental funding for particular library projects. The 
Foundation had been operating under an MOU with the 
City and County of San Francisco, dated May 2, 1996, 
which terminated on June 30, 1999, the date the 
Foundation ceased to exist. The Foundation had also been 
operating under an events management agreement, dated 
September 30, 1996, in which the Foundation provided 
services for the marketing and management of the event 
space in the Main Library for meetings, lectures, 
receptions, and other private events after the Library's 
public hours. Although the events management agreement 
with the Foundation expired on June 30, 1999, the 
Foundation continued to provide special event management 
services to the Library in FY 1999-2000. 

2. The proposed MOU, including the Marketing and Events 
Management Agreement, would cover the merged 
organization. Friends and Foundation of the San Francisco 
Public Library, and would be effective retroactively to the 
date of the merger. July 1. 1999. The proposed MOU. except 
for the Events Management Agreement, would be effective 
through June 30. 2005 and could be extended on a year-to- 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

8? 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



year basis after June 30, 2005. Tbe Marketing and Events 
Management Agreement, which is Section 3 of the subject 
MOU, would be effective retroactively to July 1, 1999 
through June 30, 2000. Under the terms of the MOU, the 
Friends and Foundation had the option to extend the 
Marketing and Events Management Agreement for a period 
of up to one year from July 1, 2000 through June 30, 2001 
by giving written notice to the City after June 1, 2000 and 
before June 30, 2000. Under the terms of the MOU, such 
extension would be subject to the approval of the City 
Librarian and the appropriation of funds by the Board of 
Supervisors. According to Ms. Adine Varah of the City 
Attorney's Office, because the Friends and Foundation did 
not exercise their option to extend the Marketing and 
Events Management Agreement during the time period 
specified in the MOU, the Agreement terminated on June 
30, 2000 and will not be renewed. 

3. Under the proposed MOU, the Friends and Foundation 
would provide the City a minimum of $200,000 per year in 
private funding. The Library would provide to the Friends 
and Foundation 2,686 square feet of office space for $1 
annual rent and 300 square feet of gift shop space for $1 
annual rent. The Library would provide basic building 
utilities and services, including electricity, heating, 
ventilation, air conditioning, and janitorial services, at its 
costs. According to the MOU, under no event would the 
$200,000 in annual private funding be less than the fair 
market value of the office and gift shop space, totaling 
2,986 square feet (2,686 plus 300). According to Ms. 
Claudine Venegas of the Department of Real Estate, 
commercial rental space in the Civic Center ranges from 
$32 to $36 per square foot annually. Therefore, fair 
market value for the subject office space would range from 
$95,552 annually (2,986 square feet time $32 per square 
foot) to $107,496 annually (2,986 square feet time $36 per 
square foot). 

4. The proposed ordinance would amend the Administrative 
Code to authorize the City Librarian to accept and expend 
funds of $25,000 or less from the Friends and Foundation 
without Board of Supervisors approval. The proposed 
amendment would require that the City Librarian submit a 
written report to the Controller and the Clerk of the Board 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

of Supervisors annually listing the gifts accepted from the 
Friends and Foundation and summarizing how such funds 
were expended. Currently, Board of Supervisors approval 
is required to accept and expend gifts greater than $5,000. 
According to Mr. Nichols, the Library has submitted 4 such 
resolutions to the Board of Supervisors in FY 1999-00. As 
stated in the attached memorandum (Attachment) provided 
by the Library, the Library would benefit from the proposed 
amendment to the Administrative Code, because the 
amendment would "facilitate timely implementation of 
activities funded through gift funds received from the 
Friends and Foundation, (and) reduce the Library's 
administrative processing of various small gifts provided by 
the Friends and Foundation without compromising the 
need for public disclosure of funds received and spent". The 
Budget Analyst considers approval of the proposed 
amendment to the Administrative Code to be a policy 
matter for the Board of Supervisors because it would 
authorize the City Librarian to accept and expend gifts up 
to $25,000 from the Friends and Foundation without prior 
Board of Supervisors approval 

In summary, the Budget Analyst recommends approval 
of the proposal M< >U between the City and the Friends and 
Foundation which would provide the Library a minimum of 
$200,000 per year in private funding in exchange for gift 
shop and office space for the Friends and Foundation. 
Additionally, the Marketing and Special Events Agreement, 
included in Section 3 of the proposed MOU, was terminated 
on June 30.2000. and will not be renewed. The Budget 
Analyst considers approval of the proposed amendment to 
the Administrative Code to be a policy matter for the Board 
of Supervisors because it would authorize the City 
Librarian to accept and expend gifts from the Friends and 
Foundation of $25,000 or less without prior Board of 
Supervisors approval. 

Recommendation: Approval of the proposed ordinance is a policy matter for 
the Board of Supervisors, as noted in Comment No. 4. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

of Supervisors annually listing the gifts accepted from the 
Friends and Foundation and summarizing how such funds 
were expended. Currently, Board of Supervisors approval 
is required to accept and expend gifts greater than $5,000. 
According to Mr. Nichols, the Library has submitted 4 such 
resolutions to the Board of Supervisors in FY 1999-00. As 
stated in the attached memorandum (Attachment) provided 
by the Library, the Library would benefit from the proposed 
amendment to the Administrative Code, because the 
amendment would "facilitate timely implementation of 
activities funded through gift funds received from the 
Friends and Foundation, (and) reduce the Library's 
administrative processing of various small gifts provided by 
the Friends and Foundation without compromising the 
need for public disclosure of funds received and spent". The 
Budget Analyst considers approval of the proposed 
amendment to the Administrative Code to be a policy 
matter for the Board of Supervisors because it would 
authorize the City Librarian to accept and expend gifts up 
to $25,000 from the Friends and Foundation without prior 
Board of Supervisors approval. 

5. In summary, the Budget Analyst recommends approval 
of the proposed MOU between the City and the Friends and 
Foundation which would provide the Library a minimum of 
$200,000 per year in private funding in exchange for gift 
shop and office space for the Friends and Foundation. 
According to the MOU, under no event would the $200,000 
in annual private funding be less than the fair market 
value of the office and gift shop space. Additionally, the 
Marketing and Special Events Agreement, included in 
Section 3 of the proposed MOU, was terminated on June 
30,2000, and will not be renewed. The Budget Analyst 
considers approval of the proposed amendment to the 
Administrative Code to be a policy matter for the Board of 
Supervisors because it would authorize the City Librarian 
to accept and expend gifts from the Friends and Foundation 
of $25,000 or less without prior Board of Supervisors 
approval. 

Recommendation: Approval of the proposed ordinance is a policy matter for 
the Board of Supervisors, as noted in Comment No. 4. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

8s 



Attachment 




Julv P "'000 San Francisco Public Library 

TO: Severin Campbell, Budget Analyst 
Budget Analyst's Office 

FR: Susan Hildreth, Acting City Librarian <{4r 

RE: PROPOSED AMENDMENT TO CCSF ADMINISTRATIVE CODE 



The Public Library has enjoyed a longstanding and beneficial relationship with the 
Friends of the San Francisco Public Library and the Library Foundation of San Francisco. 
Last year these two entities merged into a single organization - the Friends & Foundation 
of the San Francisco Public Library - which continues to provide substantial Financial 
support for Library programs and activities through private gifts, donations, and bequests. 
The public/private partnership fostered through the years between the Public Library and 
the Friends & Foundation has greatly benefited the Library, the City, and the public who 
use the Library's services. The proposed amendment to the Administrative Code would 
provide the following three benefits: 

1. Facilitate timely implementation of activities funded through gift funds received from 
the Friends & Foundation. 

2. Reduces the Library's administrative processing of various small gifts provided by 
the Friends & Foundation without compromising the need for public disclosure of 
funds received and spent. 

3. Reduces administrative workload for the Board and its committees by eliminating the 
need to refer routine matters to the Board for consideration. This will be 
accomplished without diminishing the Board's oversight responsibility through 
annual reporting by the Library on gifts received from the Foundation that are less 
than $25,000. 

We appreciate your review and strongly urge your support for this amendment. 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Item 13 - File 00-1249 

Department: Mayor's Office of Public Finance 



Item: 



Resolution approving and authorizing the execution and delivery of 
a Second Amendment to the Project Lease between the 
Redevelopment Agency and the City for the 1988 expansion of the 
Moscone Convention Center. 



Summary: The proposed resolution would authorize an amendment to the 
subject Project Lease between the Redevelopment Agency enabling 
the Mayor's Office of Public Finance to substitute a surety policy for 
the current balance of the debt service reserve for Series 1988 
Moscone Convention Center Expansion Project bonds. 

By doing so, net bond proceeds in the anticipated amount of 
$14,810,475 would become available for the new Moscone 
Convention Center Expansion project in FY 2000-01. The release of 
the bond funds from the debt service reserve reduces the Hotel Tax 
Fund revenue required for the new Expansion Project budgeted in 
the FY 2000-01 Convention and Facilities Management budget. 

This transaction is structured to produce a General Fund benefit in 
the amount of the bond funds that would become available 
($14,810,475), since Hotel Tax revenues not transferred to the 
Convention and Facilities Management budget become a source of 
funds for the City's General Fund. 

Description: 1. In March of 1988, the City and the Redevelopment Agency 
entered into a Project Lease Agreement for the initial Moscone 
Convention Center Expansion Project. Also in 1988. the 
Redevelopment Agency issued lease revenue bonds in a par amount 
of $137,631,130 to finance construction of the Expansion Project. 
Subsequently, in 1992, the Redevelopment Agency issued refunding 
bonds for the Expansion Project in the par amount of $100,274,997. 
Presently, the total annual debt service on the lease revenue bonds 
is $19,778,200. 

2. Lease revenue bonds require that a portion of the bond proceeds 
be set aside as a debt service reserve. The original balance of the 
debt service reserve for the initial Moscone Convention Center 
Expansion Project was $13,763,113. The estimated balance as of 
July 31, 2000 is $15,397,000 including interest earnings on the 
reserve fund. 



Board of Supervisors 
Budget Analyst 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 



3. The Mayor's Office of Public Finance proposes to substitute a 
surety policy 1 for the debt service reserve. As explained in the 
Attachment, provided by Ms. Nadia Sesay of the Mayor's Office of 
Public Finance, a competitive bid for the surety policy was 
conducted by the Mayor's Office of Public Finance. The bond 
insurance firm of Financial Security Assurance, Inc. (FSA) was 
selected as the low bidder. FSA's bid was four percent of the debt 
service reserve requirement. Therefore, the proposed cost of the 
surety policy is $550,525 (four percent of the original debt service 
reserve amount of $13,763,113). Costs that would be incurred as a 
result of the proposed transaction are shown in the table below: 

FSA - Surety Policy $ 550,525 

Financial Advisor Services 6,000 

City Attorney costs and Bond Counsel fees o00 

Mayor's Office of Public Finance 5.000 

Total Transaction Coal $ 586,525 

4. The amount of bond funds that would be released to the 
Moscone Center Expansion Project in the FY 2000-01 budget as a 
result of this transaction is therefore estimated to be $14,810 
(the $15,397,000 balance of the debt service reserve less the 
transaction cost of $586,525 shown above). 

5. Besides the transaction costs detailed above, the proposed 
substitution of the surety policy for the debt service reserve would 
also result in decreased interest earnings between the present and 
the year 2018. when the final payment will be made on the 
outstanding 1992 bonds. According to Ms. Sesay, the Mayor's Office 
of Public Finance estimates that the debt service reserve funds 
would achieve interest earnings (above the reserve requirement) 
over that period equivalent to a present value of approximately 
$4,000,000. Such additional interest earnings could be used to 
reduce debt service on the existing lease revenue bonds issued for 
the 1988 Moscone Convention Center Expansion Project over the 
period between present and the final redemption of the bonds in the 
year 2018. 



1 A surety policy is a form of insurance provided by a bond insurer to satisfy a reserve fund 
requirement for a bond issue. 

Board of Supervisors 
Budget Analyst 



Memo to Finance and Labor Committee 

July 19, 2000 Finance and Labor Committee Meeting 

Comment: During the Finance and Labor Committee's recent hearings on the 

Mayor's recommended FY 2000-01 budget, a technical adjustment 
to the budget added an expenditure appropriation of $14,915,000 to 
the Convention and Facilities Management budget to reflect the 
estimated amount of bond funds that would become available 
following approval of this proposed resolution by the Board of 
Supervisors. Since Board of Supervisors approval has not yet been 
achieved, Mr. Matthew Hymel, Deputy Controller, states that the 
$14,915,000 has been reserved by the Controller pending such 
approval. As noted above, the net proceeds currently anticipated 
from the proposed transaction total $14,810,475, or $104,525 less 
than the $14,915,000 amount in the budget. 

Mr. Hymel has confirmed that only funds in the amount of the net 
proceeds actually realized will be released for expenditure in the FY 
2000-01 Convention and Facilities Management budget. 



Recommendation: Approve the proposed resolution. 



A 



Harvey M. Rose 



Supervisor Yee 
Supervisor Bierman 
President Ammiano 
Clerk of the Board 
Controller 
Steve Kawa 



Board of Supervisors 
Budget Analyst 



Office of the Mayor 
san francisco 




Attachment 



Willie Lewis Brown, Jr. 



July 11,2000 



TO: Ken Bruce 

Budget Analyst ./ 

FROM: Nadia Sesay \SjL 

Public Finance 

RE- Redevelopment Agency of the City and County of San Francisco Lease 

Revenue Bonds (George R. Moscone Convention Center) Series 1988 and 
. Series 1992 Reserve Fund Substitution 



The Redevelopment Agency and the Mayor's Office of Public Finance are in the process of 
substituting a debt service reserve surety bond, to be provided by Financial Security Assurance 
Inc. (FSA), for the cash reserve currently in place for the above-referenced financings 

FSA was selected through a bid process with their bid being the lowest, premium of 4.00% of the 
reserve requirement. The reserve requirement is $13,763,1 13. The costs associated with this 
transaction are as follows: 



FSA (Surety bond Provider) 
CSG ( Financial Advisor) 
City Artomey and Bond Counsel 
Mayor's Office of Public Finance 
TOTAL 



$550,525 

6,000 

25,000 

5.000 

5586,525 



The balance in the Reserve Fund as of today is 515,328,354. Tne funds are currently invested in 
Commercial Paper and will mature on July 31, 2000. The amount of S14,915,000 submitted to 
the board represents the maximum net amount the City will receive at the closing of this 
transaction. 

The surety policy which will be in place upon completion of this transaction will transfer or. July 
1, 2004, the Cross Over Date, to satisfy the reserve requirement of the Series 1992 bonds. The 
reserve requirement on the Series 1992 Bonds is S9,047,279.75. The present value in lost interest 
due to the substitution is approximately $5.6 million in interest earnings over the life of the 
bonds, which have a final maturity of July 1, 2018 which includes 51 56 million in earnings 
currently in the account. 

I hope I was able to answer your questions. Please feel free to call me at (415) 554.5956 with any 
additional questions. 



1 DR. CARLTON B COODLeTT PLACE. ROOM 260 »AN fRANCHCO. CALIFORNIA M102 
(411) (14-1141 

RfcrcLeo urtR 



'C.z$4 



[All Committees] 

City and County of^an Francisco m^ 6 ™™ 60 ' Docume nt Section 
fleeting Minutes 
Finance and Labor Committee 

Members: Supervisors I. eland Yee, Sue Bierman, Tom Ammiano 
Clerk: Mary Red 



>/< 



DO 



Wednesday, July 26, 2000 1 0:00 AM City Hall, Room 263 

Regular Meeting 



Members Present: Leland Y. Yee, Tom Ammiano. 
Members Absent: Sue Bierman. 



Meeting Convened 

The meeting convened at 10:12 a.m. 

001231 [Building Code - Apartment House and Hotel License Fees] 

Ordinance amending Part II, Chapter 1, of the San Francisco Municipal Code (Building Code) by amending 
Table 1-P of Section 1 10 to change the method of calculating the annual apartment house fees from number of 
rooms to number of units. (Building Inspection Department) 

(Amends Table 1-P of Section 110.) 

6/28/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Lesley Stans field. Department of Building 

Inspection; Supervisor Yee. 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



001156 [Debt Limit Information] 
Supervisor Yee 

Ordinance amending Article V of the San Francisco Municipal Elections Code, by amending Section 520 to 
require the Controller's financial analysis of any general obligation Bond measure to include an explanation of 
the City's legal debt limit, as well as the impact of the proposed Bond measure on that limit. 

(Amends Section 520.) 

6/19/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Haney Rose, Budget Analyst; Ed Harrington. Controller; Supervisor Yee; 

Emeric Kalman. 

RECOMMENDED by the following vote: DOCUMENTS DFPT 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 

JUL 3 1 2000 



SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco 1 Printed at 3:25 PM on 7/26/00 



Finance and Labor Committee 



Meeting Minute 



July 26, 2000 



000903 [Reserved Funds, Planning Department) 

Hearing to consider release of reserved Funds, Planning Department (File 990668: Ordinance No. 127-99), in 

the amount of $50,000 to fund the services of an outside contractor, DMG Maximus, Inc., to analyze the 

Department's current fee schedule. (Planning Department) 

5/17/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Haney Rose. Budget Analyst; Ed Harrington. Controller. Costolino Hogan. 

Fiscal Officer, Planning Department; Diane Ltm. Manager. Finance and Administration. Planning 

Department. 

Release of reserved funds Disapproved. 

FILED by the following vote: 

Ayes: 2 - Yee. Ammiano 

Absent: 1 - Bierman 



000998 [General Plan Amendments designating 45 Hoff Street and 236-238 Vernon Street as "proposed public 
open space," Planning Case No. 2000.026FM| 

Resolution approving amendments to the San Francisco General Plan in order to approve acquisition of Lot 19 
in Assessor's Block No. 3569, also known as 45 Hoff Street, and acquisition of Lots 30, 31 in Assessor's Block 
No. 7075, also known as 236-238 Vernon Street, by the City and County of San Francisco, to establish a new 
public park in the North Mission District and to enlarge Brooks Park; incorporating by reference findings 
pursuant to the California Environmental Quality Act. (Planning Department) 

(Fiscal impact; Case Report dated May 4, 2000 regarding proposal to amend the Recreation and Open Space 
Element of the General Plan; Planning Commission Resolution No. 15068 dated May 25, 2000 adopting 
amendment to the Recreation and Open Space Element of the General Plan, Planning Commission Resolution 
No. 15069 adopted May 25, 2000 finding the project in conformity with the General Plan; Certificate of 
Determination of Exemption Exclusion from Environmental Review dated March 13, 2000.) 
5/26/00, RECEIVED AND ASSIGNED to Finance and Labor Committee Also see Files 000223 and 000788 
Heard in Committee. Speakers: Haney Rose. Budget Analyst, Supervisor Ammiano; Stephen Shotland. 
Planning Department 
RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



001136 |PL'C-San Joaquin River agreement to implement the 1995 California Water Quality Control Plan.| 

Resolution authorizing the General Manager of the Public Utilities Commission to execute an agreement on 

behalf of the City and County of San Francisco. (San Joaquin River agreement to assist in funding salmon 

monitoring programs over the next 12 years to implement the 1995 California Water Quality Control Plan.) 

(Public Utilities Commission) 

6/14/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Haney Rose. Budget Analyst. Michael Carlin. Public Utilities Commission 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



City and County of San Francisco 



Printed at 3:2! PSf on ' 16. 00 



Finance and Labor Committee 



Meeting Minutes 



July 26, 2000 



001197 [Airport Lease for China Airlines, Ltd.] 

Resolution approving a lease agreement for cargo warehouse and office space in the West Field Cargo 

Building I, between China Airlines, Ltd., and the City and County of San Francisco, acting by and through its 

Airport Commission. (Airport Commission) 

6/21/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Jon Ballesteros. 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



001201 [Airport Lease for Asiana Airlines, Inc.] 

Resolution approving a lease agreement for cargo warehouse and office space in the West Field Cargo 

Building I, between Asiana Airlines, Inc., and the City and County of San Francisco, acting by and through its 

Airport Commission. (Airport Commission) 

6/21/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Jon Ballesteros. 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



001245 [Airport Lease for North Field Cargo Building I to Korean Air Lines, Ltd.] 

Resolution approving lease agreement for cargo warehouse and office space in the North Field Cargo Building 

I, between Korean Air Lines, Ltd., and the City and County of San Francisco, acting by and through its Airport 

Commission. (Airport Commission) 

7/3/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Han'ey Rose, Budget Analyst; Jon Ballesteros. 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



001230 [Prop J, Contracting out Airport Shuttle Bus Services] 

Resolution approving the Controller's certification that shuttle bus services for San Francisco International 

Airport's Long-term Parking Lot and the Employee Garage DD can practically be performed by private 

contractor at a lower cost than if work were performed by City and County employees at presently budgeted 

levels. (Airport Commission) 

6/28/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Han'ey Rose, Budget Analyst; Jon Ballesteros; Emeric Kalman. 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



City and County of San Francisco 



Printed at 3:25 PM on 7/26/00 



Finance and Labor Committee Meeting Minutes July 26, 2000 



001239 |Prop J, Contracting out management of Bill Graham Civic Auditorium/Moscone Center] 

Resolution concurring with Controller's certification that convention facilities management, operation and 

maintenance services can be practically performed at Bill Graham Civic Auditorium and Moscone Center by 

private contractor for lower cost than similar work services performed by City and County employees. 

(Administrative Services Department) 

6/29/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst. John Noguchi. Convention Facilities 

Management. 

RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent. 1 - Bierman 



001241 [Reserved Funds, Treasure Island Development Authority 

Hearing to consider the following request from Treasure Island Development Authority: ( 1 ) Release of 

reserved funds, (Fiscal Year 1999-2000 Budget), in the amount of S2 15,325 to fund an extension of the 

Authority's contract for environmental monitoring services for the period July 1, 2000 - December 31, 2000; 

(2) Reallocate SI 30,000 to fund a Environmental Impact Report for the conveyance of former naval station 

Treasure Island to the Authority. (Mayor) 

6/28/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Harvey Rose. Budget Analyst. Annemanc Conroy, Executive Director. 

Treasure Island Development Authority. Enteric Kalman 

Amended, release of reserved funds in the amount of $215,325, approved: 

release of resented funds in the amount of SI 30.000 to pay consultant to prepare EIR pending selection of 

contractor and submission of budget details, continued to call of the chair 

AMENDED by the following vote: 

Ayes: 2 - Yee. Ammiano 

Absent: 1 - Bierman 

Hearing to consider release of reserved funds in the amount of SI 30,000, Treasure Island Development 
Authority, to fund an Environmental Impact Report for the conveyance of former naval station Treasure Island 
to the Authority. (Mayor) 
CONTINUED TO CALL OF THE CHAIR b> the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



001059 |Option Contract for the Sale of Real Property! 
Supervisor Kaufman 

Resolution adopting findings pursuant to the California Environmental Quality Act; declaring the Bemal 
property to be surplus; approving an option contract for the sale of the Bernal property to GHC Bemal 
Investors. LLC. 

6/5/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

6/12/00, SUBSTITUTED. Supervisor Kaufman submitted a substitute resolution bearing same title 
6/12/00, ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Harvey Rose. Budget Analyst: Larry Klein. Acting General Manager. Public 
Utilities Commission: Carol Meyer. GHC Bernal Investors. LLC: Supervisor Yee: Charles Sullivan. Deputy 
City Attorney. 
RECOMMENDED by the following vote: 

Ayes: 2 - Yee, Ammiano 

Absent: 1 - Bierman 



Off and County of San Francisco 4 Printed at 3:2 5 M on ' Tft M 



Finance and Labor Committee Meeting Minutes July 26, 2000 



ADJOURNMENT 



The meeting adjourned at 1 1:39 a.m. 



City and County of San Francisco 5 Printed at 3:25 PM on 7/26/00 



|a5f 



[Budget Analyst Report] 
Susan Horn 

Main Library-Govt. Doc. Section 



CITY AND COUNTY 




OF SAN FRANCISCO 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



July 20 , 2000 

TO: ^Finance and Labor Committee 

r 

FROM: ^udget Analyst 

SUBJECT: Jyly 26, 2000 Finance and Labor Committee Meeting 

Item 1 - File 00-1231 



DOCUMENTS DEP7\ 

iUi 2 5 2000 

SAN FRAMCISCO 
PU BLIC LIBRARY 



Department: 
Item: 



Description: 



Department of Building Inspection (DBI) 

Ordinance amending Part II, Chapter I, of the San 
Francisco Municipal Code (Building Code) by amending 
Table 1-P of Section 110 to change the method of 
calculating the annual apartment house license fees from 
number of rooms to number of units. 

Building Code Section 110, Table 1-P, sets the annual 
apartment house and hotel license fees. The proposed 
ordinance would amend Building Code Section 110, Table 
1-P to (a) change the method of calculating the annual 
apartment house license fee, (b) include an additional fee 
for hotels with more than 175 rooms, and (c) eliminate the 
current fee for change of ownership of apartment houses 
and hotels. Currently, annual apartment house license 
fees are based upon the total number of rooms in the 
building, regardless of how many individual residential 
units (apartments) are in the building. 1 The proposed 



1 For example, under the current Building Code an apartment building which contained 3 units or 
apartments of 4 rooms each would be assessed the apartment house license fee based upon 12 rooms 
(3 times 4). Under the proposed ordinance, the apartment building would be assessed the apartment 
house license fee based upon 3 units. 



Memo to the Finance and Labor Committee 

April 26, 2000 Finance and Labor Committee Meeting 



ordinance would change the method of calculation of 
annual apartment house license fees by basing such fees 
on the number of individual residential units rather than 
the total number of rooms in the building. The proposed 
ordinance would calculate the annual apartment house 
license fee as follows: 



Current Building Code, 
Section 110, Table IP 


Proposed Building Code, 
Section 110, Table 1-P 


Annual Apartment House 
License Fee 


Less than 20 rooms 


3 units 


Sill. 85 


20 to 29 rooms 


4 to 6 units 


S142.00 


30 to 39 rooms 


7 to 10 units 


S187.95 


40 to 49 rooms 


11 to 15 units 


S248.35 


50 to 59 rooms 


16 to 20 units 


$344.15 


60 rooms or over 


21 to 30 units 


$404.50 



Under the current Building Code, the annual license fee is 
capped at $404.50 for apartment houses of 60 rooms or 
more. Under the proposed ordinance, apartment houses 
of more than 30 units would pay an annual fee of $50 for 
each additional 10 units in addition to the annual fee of 
$404.50. 



Fiscal Impact: 



Under the current Building Code, the annual hotel license 
fee is capped at $563.05. L'nder the proposed ordinance, 
hotels with more than 175 rooms would pay an annual fee 
of $50 for each additional 25 rooms, in addition to the 
annual fee of $563.05. 

Additionally, the proposed ordinance would eliminate the 
$34.15 fee charged when the apartment house or hotel 



changes ownership. 



Under the current fee structure, in FY 1999-2000 DBI 
budgeted for $3,150,000 in apartment license fees and 
collected $2,852,686 in such fees, which is $297,314 or 9.4 
percent less than the budgeted amount. Under the 
proposed ordinance which changes the fee structure, the 
Department of Building Inspection (DBI) estimates that 
the City would collect $3,454,018 in annual apartment 
house license fees, which is $304,018 or 9.65 percent more 
than the amount of $3,150.00 which DBI budgeted in FY 
1999-00, and $601,332 or 21 percent more than the 
amount of $2,852,686 which DBI collected in FY* 1999-00. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to the Finance and Labor Committee 

April 26, 2000 Finance and Labor Committee Meeting 

Under the current fee structure, in FY 1999-2000, DBI 
budgeted for $340,000 in hotel license fees and collected 
$287,174 in such fees, which is $52,826 or 15.53 percent 
less than the budgeted amount. Under the proposed 
ordinance which removes the cap on hotel license fees for 
hotels with more than 175 rooms, DBI estimates that the 
City would collect $364,735 in annual hotel license fees, 
which is $24,735 or 7.3 percent more than the amount of 
$340,000 which DBI budgeted in FY 1999-00, and $77,561 
or 27 percent more than the amount of $287,174 which 
DBI collected in FY 1999-00. 

Ms. Lesley Stansfield of DBI states in the attached 
memorandum (Attachment), "Any resulting increase in 
revenue will be a result of a more efficient system, not an 
increase of fees". Ms. Stansfield advises that DBI did not 
include increased fee revenues in the FY 2000-01 budget. 
The Attachment provides an explanation of the reasons 
for the proposed changes in the fees. 

Comments: 1. According to Ms. Stansfield, the City currently 

maintains records on the number of individual residential 
apartment units rather than on the total number of rooms 
in an apartment building. Because the City tracks the 
number of individual residential units and not the total 
number of rooms in an apartment building, Ms. Stansfield 
states that the proposed ordinance would allow the City to 
more accurately assess and collect the annual apartment 
house license fees and increase the amount of revenues 
collected. Additionally, Ms. Stansfield states that the 
additional fees for apartment houses with more than 30 
units and hotels with more than 175 rooms would allow 
the City to defray a portion of the costs of inspecting such 
apartment houses and hotels. As noted previously, DBI 
estimates that the City would receive $601,332 or 21 
percent more in FY 2000-01 from apartment house license 
fees than were actually collected in FY 1999-2000, and 
$77,561 or 27 percent more in FY 2000-01 from hotel 
license fees than were actually collected in FY 1999-2000 
due to the proposed change in the method of calculating 
such fees. Ms. Stansfield advises that the apartment 
house and hotel license fees defray a portion of the costs of 
routine and complaint-driven inspections of apartment 
houses and hotels, and that the total cost of apartment 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Memo to the Finance and Labor Committee 

April 26, 2000 Finance and Labor Committee Meeting 

house and hotel inspections is funded by the Building 
Inspection Fund. 

Recommendation: Approval of the proposed ordinance is a policy matter for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

4 



Jul 



20-00 04 : 56P 

.- - I 



Attachment 



i Stansfield, Lesley A 



From: 
Sent: 
To: 
Subject: 



Stansfield, Lesley A 
Thursday, July 20. 2000 4:51 PM 
Campbell. Severin 
Liscence fee changes 



Reasons for the changes: 

1 . For years we have been unable to collect all the fee money due us for apartment buildings because many of our records 
have no information on room counts. It is difficult to obtain accurate information in this area because it entails review of 
approved building permit plans or a physical walk through of the premesis to make the count. Sometimes it is impossible to 
gain entry to the building. We do not use this room count information for any other purpose. 

2. However, all of our records do i;ontain information on tne number of units. We receive this from the assesors records, 
City Planning data and our own historical archives. Also, the service provided and time spent on each inspection has a 
better correlation with number of units than number of rooms. We spend more time in public areas or with a complaintant 
in a unit than on a per room basis 

3. Finally, the Building Inspection Commission asked us to correct the inequity of cut off fees for both Apartments and 
hotels. All Apartments over 60 rooms and all Hotels over 150 rooms pay a flat fee no matter how large. This has the effect 
of smaller buildings subsidizing the larger ones which receive substantially more service. 

4. Any resulting increase in reven je will be a result of a more efficient system not an increase of fees. 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Item 2 -File 00-1156 



Item: 



Description: 



Ordinance amending Article V of the San Francisco 
Municipal Elections Code, by amending Section 520, to 
require the Controller's financial analysis of any General 
Obligation Bond measure to include an explanation of the 
City's Legal Debt Limit, as well the impact of the 
proposed bond measure on that limit 

Currently, the Municipal Elections Code, Section 520, 
requires the Controller to prepare an impartial financial 
analysis of each measure submitted to the voters, to be 
included in the voter information pamphlet. This anal; 
must include any increase or decrease in cost to the City, 
as well as changes to the tax rate, resulting from the 
measure. The subject ordinance would amend the 
Municipal Elections Code, Section 520, to require the 
Controller to also include in the voter information 
pamphlet, for any General Obligation bond measures 
placed on the ballot, a separate analysis of the City's legal 
debt limit and the impact of any proposed bond measures 
on that limit. 



Comments: 



1. According to Mr. Harrington, as a service to voters, the 
Controller already provides information about the effect of 
proposed bond measures on the City's legal debt limit in 
the voter information pamphlet, as part of a separate 
section labeled "An Overview of San Francisco's Debt." 
Mr. Harrington is concerned that also including this 
information about the City's debt limit under the 
description for specific General Obligation bond measures, 
as required by the subject ordinance, would separate 
information that should, in fact, be read as part of the 
Controller's larger analysis of the City's debt. Therefore, 
as an alternative to the proposed ordinance, Mr. 
Harrington suggests that voters would be better served if 
the Controller added a sentence in his impartial financial 
analysis describing specific General Obligation bond 
measures, which would refer voters to the "Overview of 
San Francisco's Debt" analysis contained separately in 
the voter information pamphlet. 

2. Currently, the separate "Overview of San Francisco's 
Debt." provided by the Controller in the Voter 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Information Packet, includes an analysis of the of the 
City's debt limit, and the effect of any proposed General 
Obligation bond measures on that debt limit. This 
"Overview" currently provides an analysis of how all 
General Obligation bonds on the ballot will collectively 
affect the City's debt limit. Mr. Harrington advises that 
he would support also including in his "Overview" an 
analysis of how each proposed bond measure will 
individually affect the City's debt limit. 

3. According to Ms. Patty Fado of the Department of 
Elections, the subject ordinance expanding the 
Controller's analysis in the voter information pamphlet 
would result in increased printing costs, however, the 
exact amount of these increased costs would depend on 
the length of the Controller's analysis and the number of 
General Obligation bond measures on the ballot. Ms. Fado 
advises that, currently, there is no limit on the number of 
words that may be included in the proposed expanded 
Controller's analysis. 

Recommendation: Approval of the proposed ordinance is a policy matter for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meetinn 



Item 3 - File 00-0903 

Department: 

Item: 



Source of Funds: 



Description: 



City Planning Commission (CP 1 

Hearing to consider release of reserved funds, Planning 
Department (File 99-0668; Ordinance No. 127-99). in the 
amount of $50,000 to fund the services of an outside 
contractor, DMG Maximus, Inc., to analyze the Planning 
Departments current fee schedule. 

FY 1998-99 Supplemental Appropriation of Planning Fee 
Revenues, approved by the Board of Supervisors in April 
of 1999. 

In April of 1999, the Planning Department requested a 
supplement nl appropriation to authorize the Planning 
Department to spend $541,530 in Department fee 
revenues for: (a) $491,530 computer equipment and 
software for Year 2000 compliance, and (b) $50,000 for a 
comprehensive analysis of the Department's fees for 
services to the public. 

The Finance and Labor Committee approved the $491,539 
for Year 2000 compliance and placed on reserve the 
$50,000 requested to study the Department's fee schedule, 
pending budget details and the selection of a consultant. 

The subject $50,000 in reserved funds would be used to 
pay an outside consultant, DMG Maximus, Inc., for the 
analysis it has already completed of the Planning 
Department's fee schedule. According to Mr. Hogan. DMG 
Maximus, Inc. began working on the Planning 
Department's fee schedule analysis in December of 1999 
and completed its study in June of 2000. Mr. Hogan 
advises that the Planning Department negotiated with 
the Controller's Office to include the Planning 
Department's fee study within a larger City contract with 
DMG Maximus, Inc. for financial consulting services in 
order to expedite the completion of the fee schedule 
analysis (See Comment No. 1 for additional details). 



BOARD OF SUPERVISORS 
BUDGE^ ANALYST 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Budget: The budget for the subject reserved funds is as follows: 

Rate per Hour Number of Hours Total Cost 

$145 344.83 $50,000 



Comments: 1. According to Ms. Ann Carey of the Controller's Office, 

the City has had a contract in the amount of $360,000 
with DMG Maximus, Inc. since March 1, 1997 for 
technical assistance with cost reimbursements related to 
State mandates and other financial services. Ms. Carey 
advises that the Controller's Office selected DMG 
Maximus, Inc. on a sole sources basis, based on the 
contractor's expertise in State-mandated cost 
reimbursements. Ms. Carey advises the City's contract 
with DMG Maximus, Inc. includes a provision allowing 
DMG Maximus, Inc. to provide additional services to the 
City as needed, upon written request by the City. 

2. The Budget Analyst notes that the Planning 
Department did not follow the required procedure for the 
subject contract with DMG Maximus, Inc. The City 
Planning Commission should have taken the following 
four steps to procure services under the Term Purchase 
Agreement with DMG Maximus, Inc.: (1) after drafting a 
task plan for the services, the Department should have 
submitted the plan to the Controller; (2) the Controller 
would have then decided whether or not to approve the 
task plan; (3) the Department should have then requested 
a release of the reserved funds from the Finance and 
Labor Committee, based upon the approved task plan, 
prior to doing any work on the project; and (4) once the 
reserved funds were released, the Controller would have 
then authorized the contractor to begin the work outlined 
in the task plan. In this case, according to Mr. Hogan, the 
Planning Department did draft a task plan. However, Ms. 
Carey advises that the Planning Department did not 
submit the task plan to the Controller for approval. In 
addition, the Planning Department failed to request that 
the Finance and Labor Committee release the reserved 
funds before the Planning Department gave the contractor 
permission to begin work. Ms. Carey also advises that the 
Planning Department failed to seek final authorization 
from the Controller for the contractor to begin work, and 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

9 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

that the Controller, not the Planning Department, should 
have been the Department to notify the contractor of 
permission to begin, since in this case, it is the Controller 
who administers the on-going contract with DMG 
Maximus, Inc. 

3. As previously stated, the Finance and Labor Commute.- 
reserved the subject $50,000 for an analysis of the 
Planning Department's fee schedule, pending selection of 
an outside consultant and submission of budget details. In 
summary, the Budget Analyst notes that: (1) the Planning 
Department selected DMG Maximus, Inc. to conduct the 
fee analysis on a sole source basis based on an existing 
contract between DMG Maximus. Inc. and the 
Controllers Office and based on DMG Maximus' 
experience with similar fee analyses and cost recovery 
studies; (2) the subject release of reserved funds would 
retroactively reimburse D.NH! Maximus, Inc. for work it 
has already completed, as DMG Maximus, Inc. began the 
fee analysis in December of 1999 and completed the study 
in June of 2000; (3) the Planning Department therefore 
failed to request that the Finance and Labor Committee 
release the subject reserved funds prior to authorizing 
DMG Maximus, Inc. to begin its study: and, (4) the 
Planmng Department directed DMG Maximus, Inc. to 
proceed with the fee schedule study without first 
obtaining the required authorization from the Controller, 
and without allowing the Controller, rather than the 
Planning Department, to notify the contractor of 
authorization to proceed. 

Recommendation: For all of the reasons noted in Comment No. 3 above, the 

Budget Analyst considers the proposed release of reserved 
funds to be a policy matter for the Finance and Labor 
Committee. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Item 4 - File 00-0998 



Department: 



Department of Real Estate (DRE) 
City Planning (CPC) 
Recreation and Park (RPD) 



Item: 



Description: 



Resolution approving amendments to the San Francisco 
General Plan to approve acquisition by the City and 
County of San Francisco of Lots 30 and 31 in Assessor's 
Block No. 7075, also known as 236-238 Vernon Street, to 
enlarge Brooks Park, and acquisition of Lot 19 in 
Assessor's Block No. 3569, also known as 45 Hoff Street, 
to establish a new public park in the North Mission 
District; incorporating by reference findings pursuant to 
the California Environmental Quality Act (CEQA). 

The subject resolution would amend the General Plan to 
authorize the Recreation and Park Department (RPD) to 
designate two sites as proposed open space in the 
Recreation and Open Space Element of the General Plan. 
However, according to Mr. Robert McDonald of RPD, 
amending the General Plan to include the two subject 
sites, described below, would not authorize RPD to 
acquire the property. For the first site, 236-238 Vernon 
Street, located in the Ocean View/Merced Heights 
neighborhood, RPD would be required to return to the 
Board of Supervisors to obtain authorization to purchase 
the property. For the second site, 45 Hoff Street, located 
in the North Mission area, the Board of Supervisors 
already authorized RPD to purchase the lot in May of 
2000 (Resolution No. 00-0788, See Comment No. 2 below). 

Brooks Park Addition 

According to the Planning Department, Brooks Park is an 
existing hilltop park located in the Ocean View/Merced 
Heights neighborhood. RPD has proposed to acquire two 
lots adjacent to Brooks Park, located at 236-238 Vernon 
Street (Lots 30 and 31, Assessor's Block 7075), in order to 
expand and improve access to Brooks Park. (See 
Attachment I for map, provided by the Planning 
Department). Lot 30 and Lot 31 consist of 2,500 square 
feet each, for a total of 5,000 square feet. The subject 
resolution would amend Map 4 of the General Plan, the 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance and Labor Commit t< ■<• 

July 26, 2000 Finance and Labor Committee Meeting 



Recreation and Open Space Element, to include 236-238 
Vernon Street under the category "Proposed Public Open 
Space, Acquire for or Convert to Public Open Space." 

According to the Planning Department, Lots 30 and 31 
are privately owned by the same person and undeveloped. 
The Department of Building Inspection (DBI) has issued 
to the property owner site permits to construct one single- 
family residence on each of the two lots. According to the 
Planning Department, if the City amends the General 
Plan and designates the subject lots as "Proposed Open 
Space," the property owner will continue to have the right 
to pursue development of the privately-owned property. 
However, if the City acquires the subject property, then 
RPD would seek to reclassify the zoning of the property 
from single-family housing to public use and open space. 
As previously stated, RPD will be required to return to 
the Board of Supervisors to obtain approval to purchase 
the property According to Mr. McDonald, if the City does 
acquire the subject lot, the RPD plans to establish native- 
plants on the site and provide an access trail to the 
Brooks Park interior. 



North Mission Park 

RPD is in the process of acquiring one lot in the North 
Mission area located at 45 Hoff Street (Lot 19, Assessor's 
Block No. 3569), consisting of 10.104 square feet, in order 
to construct a neighborhood park. This lot is located 
between 16 th and 17 th Street, one block from the 16 th 
Street and Mission BART station. (See Attachment II for 
map. provided by the Planning Department). The subject 
resolution would amend Map 4 of the General Plan, the 
Recreation and Open Space Element, to include 45 Hoff 
Street under the category "Proposed Public Open Space, 
Acquire for or Convert to Public Open Space." 

According to the Planning Department. Lot 19 is 
currently used as a surface parking lot. The Planning 
Department advises that the North Mission area is not 
served by any City-owned parks or open space, and that 
the area has been designated a "High Need Area" for open 
space and recreational improvements. The subject 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

property would be used for a mini-park, including a 
children's playground, pending completion of the 
community input process. 

As previously stated, in May of 2000, the Board of 
Supervisors authorized RPD to purchase the subject 
property at 45 Hoff Street for a total of $1,365,000, 
pending (See Comment No. 2 below). 

Comments: 1. According to Mr. Ken Chopping of DRE, at this time, 

DRE is not able to provide an appraised value for Lots 30 
and 31, adjacent to Brooks Park (236-238 Vernon Street). 
Mr. Chopping also advises that DRE is not certain 
whether the owner of the subject property adjacent to 
Brooks Park is a willing seller of both Lot 30 and Lot 31. 
As previously stated, if the City approves the subject 
resolution and designates the subject lots as "Proposed 
Open Space," the property owner will continue to have the 
right to pursue development of the privately-owned 
property under a building permit granted by the 
Department of Building Inspection. 

2. In May of 2000 the Board of Supervisors authorized 
RPD to purchase the subject property at 45 Hoff Street in 
the North Mission area for a purchase price of $1,350,000, 
or $133.61 per each of the 10,104 square feet, plus 
$15,000 in closing costs, for a total cost of $1,365,000, 
which according to Mr. Chopping represents fair market 
value (Resolution No. 00-0788). According to Mr. 
McDonald, this land purchase of $1,365,000 is being 
funded partially by a State General Fund Grant 
($1,083,500) and partially from the Open Space Fund 
($281,500). The specific plans for the proposed mini-park 
and children's playground to be developed on the subject 
property would be determined through a community 
hearing process. Mr. McDonald states that RPD has 
allocated a total $1,000,000 in Open Space Funds to 
purchase and develop a North Mission Open Space 
property. Of the $1,000,000 allocated for North Mission 
Open Space, $500,000 in Open Space Funds were 
included in the FY 2000-2001 RPD budget and $500,000 
in Open Space Funds were allocated in prior years' 
budgets for purchase and development of a North Mission 
Open Space property and not expended ($200,000 in FY 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



1996-97, $200,000 in FY 1997-98, and $100,000 in FY 
1998-99, totaling $500,000). Of the $1,000,000 in 
available funds, $281,500 would be expended for the 
purchase of the subject property, as stated above, and 
$718,500 would remain for the design and development 
costs of the proposed mini-park. Mr. McDonald states that 
actual design and development costs have not yet been 
determined, pending completion of the community 
hearing process. According to Mr Chopping, DRE is still 
negotiating with the property owner and expects to close 
escrow in August of 2000. Mr. McDonald estimates that 
public hearings on the use of the North Mission property 
would take place in Fall of 2000, and construction of the 
proposed park would begin in Spring of 2001 and be 
completed by Winter of 2002. According to Mr. McDonald. 
RPD requires approval of the subject resolution in order 
to complete the purchase of the property 

3. On March 13, 2000. the Planning Department certified 
that the proposed amendments to the General Plan are 
exempt from review under the California Environmental 
Quality Act (CEQA). 

4. In a letter dated May 26, 2000. Mr. Gerald Green, 
Director of Planning, found that the subject amendments 
to the General Plan to designate proposed Brooks Park 
Addition and North Mission Park as "proposed Public 
Open Space. Acquire for Convert to Public Open Space." 
were in conformity with the goals of the General Plan. On 
May 25. 2000 the Planning Commission adopted the 
subject amendments to the General Plan (Resolution 
15068). 



Recommendation: Approval of the proposed resolution is a policy matter for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Attachment I 



Resort on the San Francisco Park and Open Space Program, Fiscal Year 2000-2001 



San Francisco Planning Department 

San Francisco Park & Open Space Program, FY 2000-2001 
Proposed Acquisition & Development Funding 



WY 



SHIELDS ST 



Brooks 
Park! 



Brooks Part<s£3S£| 
Extension 2 



Brooks Park 
Extension 1 



h- 



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SARGENT 



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33 



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: >opcsed Acquisition, Brooks Park 
Ixiension 2. AB 7035. lots 30. 31 



existing Park Ooen Soace 



Planning Department Reports 



15 



G \MPian\coarkmao 'A/or'lavOut -l 



Attachment II 



Report on the San Francisco Park and Open Space Program. Fiscal Year 2000-2001 



San Francisco Planning Department 

San Francisco Park & Open Space Program, FY 2000-2001 
Proposed Acquisition & Development Funding 




North Mission Park Site. AB 3569. lot 19 
= ":c:seo Acquisition & Develooment Site 






Existing Park / Open Soace 



P'ar.mng Decanment Recor.s 



16 



3 MP'anczarxrrac ^oriayOut • 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



Item 5- File 00-1136 

Department: 

Item: 



Public Utilities Commission (PUC) 

Resolution authorizing the General Manger for the Public 
Utilities Commission (PUC) to execute the San Joaquin 
River Agreement on behalf of the City and County of San 
Francisco. 



Amount: 



Source of Funds: 



Description: 



$150,000 over the next 12 years ($12,500 per year), from 
August of 2000 until August 2012, payable by the City to 
the San Joaquin River Group Authority (See Comment 
No. 1 for details). 

Hetch Hetchy Budget ($12,500 included in the Fiscal 
2000-2001 budget and $12,5000 to be included in each of 
the budgets for the following 11 Fiscal Years). 

In 1995, the State Water Resources Control Board 
adopted the Water Quality Control Plan of the San 
Francisco Bay/San Joaquin Delta Estuary ("the State 
Plan") in an effort to protect salmon and other wildlife by 
setting standards for chemical quality and the amount of 
water flowing in the San Joaquin River and its 
tributaries. According to Mr. Michael Carlin, the Water 
Resources Planning Manager for the Public Utilities 
Commission (PUC), the State Water Resources Control 
Board noted at the time that implementation of the State 
Plan could affect the water rights of more than 500 
parties, including San Francisco's senior rights to divert 
water from the Tuolumne River, a tributary of the San 
Joaquin River. Therefore, the manner in which the State 
Water Resources Control Board implemented the 1995 
State Plan could substantially impact the City's water 
supply. 

In order to implement the 1995 State Plan, while 
protecting the water rights of involved parties, Federal 
and State agencies, major water rights holders in the San 
Joaquin River basin, and other stakeholders came 
together to create the subject 12-year San Joaquin River 
Agreement (See Attachment I, provided by the PUC, for a 
list of parties to the Agreement). The subject resolution 
would authorize the City to enter into the San Joaquin 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



River Agreement and authorize the General Manager for 
the Public Utilities Commission (PUC) to execute the 
Agreement on behalf of the City. 

The Agreement would: (1) protect salmon and other 
wildlife by setting standards for chemical quality and the 
amount of water flowing in San Joaquin River and its 
tributaries; and, (2) authorize the Yernalis Adaptive 
Management Program (VAMP), which is a study based in 
the City ofVernalis, located on the San Joaquin River, to 
analyze the effect <>f chemical quality and water level 
standards on salmon habitat conservation. (See 
Attachment II, provided by the PUC, for additional 
information). 

According to Mr. Carlin the subject Agreement does not 
require the City to release any of its stored water or 
reduce the amount of water the City is permitted to 
collect from the Tuolumne River. However, the City would 
be obligated to pay a total of $150,000, or $12,500 per 
year for the 12 years of the agreement, from August of 
2000 to August of 2012. to help fund the VAMP study of 
salmon conservation in the San Joaquin River. According 
to Mr. Carlin, the total cost of the 12-year VAMP study i- 
estimated to be $4,800,000, which will be funded jointly 
by the different parties to the subject agreement, listed in 
Attachment I. Therefore, the City would fund 3.1 percent 
($150,000) of the entire $4,800,000 12-year project. 

Other water jurisdictions party to the subject Agreement 
have agreed to release specific amounts of water over the 
next 12 years in order to meet goals set in the Agreement 
for the amount of water flowing in the San Joaquin River 
and its tributaries. Attachment III. provided by the PUC, 
lists the water schedules for participating jurisdictions. 
According to Mr. Carlin, Federal and State agencies are 
providing a total of $4 million over the next 12 years to 
compensate these jurisdictions for their water releases. As 
previously noted, the agreement does not require the City 
to release any additional water, and therefore, the City 
will not receive any of the $4 million in Federal and State 
compensation funds. Mr. Carlin advises that the City did 
not agree to releasing additional water because, if the 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

18 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



Comments: 



City did so, the City would not be able to meet water 
demand during times of shortage. 

1. According to Mr. Carlin, the City actively participated 
in the three-year negotiation that produced the San 
Joaquin River Agreement. Mr. Carlin advises that the 
parties to the San Joaquin River Agreement will be 
formally linked in a San Joaquin River Group Authority 
to administer the subject agreement and VAMP study. 
Mr. Carlin advises that the agreement authorizing the 
City to enter into the San Joaquin River Group Authority 
will be submitted separately for consideration by the 
Board of Supervisors in August of 2000. Attachment I, 
provided by the PUC, lists the members of the San 
Joaquin River Group Authority. 

2. On April 25, 2000 the Public Utilities Commission: (1) 
approved the subject agreement; (2) agreed to fund up to 
$150,000 for monitoring costs; and (3) recommended that 
the Board of Supervisors approve the Agreement 
(Resolution No. 00-0108). 



Recommendation: 



Approve the proposed resolution. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

19 



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20 



Attachment II 
Page 1 ot 'I 

AGENDA ITEM 00-0108 

Public Utilities Commission 

City and County of San Francisco 

DEPARTMENT System Planning fSPEAQ AGENDA no. 14 




MEETING DATE April 25, 2000 



SUMMARY OF PROPOSED ACTION: 



Approving the San Joaquin River Agreement, authorizing SI 50,000 (SI 2,500 annually) to fund 
San Francisco's share of monitoring costs under the Agreement, and recommending the Board of 
Supervisors approve the Agreement which has a term greater than ten years. 

DESCRIPTION OF PROPOSED ACTION: 

In 1995, the State Water Resources Control Board adopted a Water Quality Control Plan for the 
San Francisco Bay/Sacramento-San Joaquin Delta Estuary. The Plan sets interim instream flow 
objectives for the San Joaquin River to protect salmon, and long-term outflow objectives for the 
Delta to protect other fish. The San Joaquin River instream flow objectives were interim because 
of scientific uncertainty about the relative impact of flows, export pumping and other factors on 
salmon survival. 

In July 1998, the Board began water rights hearings to implement its 1995 Plan. The Board 
noticed over 500 parties that their water rights might be affected by implementation of the 1995 
Plan, including San Francisco's senior rights to divert from the Tuolumne River. The manner in 
which the Board chooses to implement the 1995 Plan may substantially impact the City's water 
supply. Many senior water rights holders have long questioned whether the Board has 
jurisdiction to limit the rights of senior water rights holders to implement the Bay-Delta water 
quality control plan. 

Federal and state agencies, major water rights holders in the San Joaquin River basin, and other 
stakeholders have jointly proposed the San Joaquin River Agreement as a settlement of their 
potential obligations to implement the 1995 Plan. The Agreement has a term of twelve years. The 
Agreement protects salmon and other fish and wildlife while conducting a test (the Vemalis 
Adaptive Management Program or "VAMP") to gain better scientific information on the 
relationship of flow, export pumping and a Delta barrier during the spring outmigration of 



APPROVAL: j 

blu»£^u M£HT ' Steve Medbery finance £arlo$~Jacobo 



S3ES5? Jill R. Thompson \ V \ 



21 



Department: 



Attachment II 
Fap,e 2 of 2 



Project; 



salmon. Under the Agreement, the San Joaquin River Group Authority guarantees up to 1 10,000 
acre-feet to supplement existing flows in the San Joaquin River at Vemalis during 31 days in 
spring in order to implement the VAMP. The Agreement also provide 12,500 acre-feet for flows 
in the Merced River in October and no less than 15,000 acre-feet for discretionary flows in the 
Stanislaus River. Federal and siate agencies will pay S4 million per year to the Authority for the 
guaranteed VAMP flows, and market price for additional flows. 

San Francisco acrivdy participated in the three-year negotiation that produced the Agreement. 
The Agreement recognizes that implementation of the 1996 Tuolumne River FERC settlement 
agreement will substantially improve habitat conditions for salmon. Under the 1996 Tuolumne 
River FERC settlement agreement, San Francisco agreed to fund up to 52.4 million in restoration 
actions and pay S3. 5 million annually to buy flows to benefit salmon. Consequently, the 
Agreement does not require San Francisco to release water to implement the 1995 Plan. 
However, the SFPUC did agreed to provide up to SI 50,000 (S 12,500 annually) to fund VAMP 
monitoring programs over the next twelve years. 

CONTEXT OF THIS ACTION: 

The SFPUC has been involved in the State Water Resources Control Board Bay-Delta hearings 
over the past five years. The San Joaquin River Agreement and VaMP have been a subject of 
those hearings. The State Board has approved the Agreement as part of the findings of the 
hearings. SFPUC joining the San Joaquin River Group Authority will give it voting rights in the 
implementation of the Agreement 

Co mmis sion approval is required for the general manager to execute the Agreement. 
Commission approval is required to authorize funding up to SI 50,000 (Si 2,500 annually) in 
monitoring costs over the next twelve years Board of Supervisor's approval by resolution is 
required because the Agreement has a term longer than ten years. 

Funding for this activity is available in the Hetch Hetchy Enterprise Object 054. Fixed Charges, 
Index Code 3261 13. 



PROS/CONS: 

The pros are that it would give the SFPUC voting rights within the San Joaquin River Group 
Authority over the implementation and direction of the Agreement. SFPUC participation in the 
Authority would be recognized in the State Board as complying with the 1995 Water Quality 
Control Plan to meet instream flow objectives. There are no significant cons to this proposal. 

ATTACHMENTS: 

1 . Resolution 



22 



Attachment III 



SJRG DIVISION AGREEMENT 
Technical Appendix 



The Division Agreement identifies the volume and order in which water is provided by the 
entities of the San Joaquin river Tributary Agencies to meet the VAMP flows. The volumes and 
priorities of the Division are as follows: 





Priority in 

Descending 

Order 


•First 50,000 

AF 

Acre-Feet 


Next 23,000 
AF 


Next 17,000 

.AF 


Next 20,000 
AF 


Totals "(AF) 




Merced ID 


25,000 


1 1,500 


8,500 


10,000 


55,000 


1 /> 


r OID/SSJID 


10,000 


4,600 


3,400 


4,000 


22,000 


in 


San Joaquin 
Exchange 


5,000 


2,300 


1,700 


2,000 


11,000 


to/ 7 
ck 


MTDAITD 


10,000 


4,600 


3,400 


4,000 


22,000 




Friant 



















SFPUC 


















From approximately February 1 th through April 1 5* of each year, the Hydrology Group of 
San Joaquin River Technical Committee (SJRTC) will meet to determine the volumes of water 
required to meet the VAMP flows. This volume of water, together with the order identified above 
and in the Division Agreement, will dictate which entities of the SJTA will be involved in the 
current year's operation for providing VAMP flows. 

Source: Public Utilities Comrnis 



Drafi4 
Jun 1. 1998 



Page 8 



23 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



Items 6. 7 and 8 - Files 00-1197. 00-1201 and 00-1245 



Department: 
Items: 



Purposes of Leases: 



Airport Commission 

Item 6, File 00-1197 : Resolution approving a Lease 
Agreement for cargo warehouse and office space in the 
West Field Cargo Building I, between China Airlines, 
Ltd., and the City and County of San Francisco, acting by 
and through its Airport Commission. 

Item 7. File 00-1201 : Resolution approving a Lease 
Agreement for cargo warehouse and office space in the 
West Field Cargo Building I. between Asians Airlines, 
Inc.. and the City and County of San Francisco, acting 

and through its Airport Commission. 

Item 8, File 00-1245 : Resolution approving a Lease 
Agreement for cargo warehouse and office space in the 
North Field Cargo Building I. between Korean Air Lines, 
Ltd.. and the City and County of San Francisco, acting by 
and through its Airport Commission. 

Items 6 and 7. Files 00-1197 and 00-1201 : These two 
new leases provide for China Airlines. Ltd. and Asiana 
Airlines, Inc. to occupy warehouse and office space in the 
Airport's West Field Cargo Building I, to be located in the 
West Field Area of the Airport. The West Field Cargo 
Building is currently under construction, at an estimated 
cost of $19,000,000. which will be reimbursed to the 
Airport through the tenants' annual rental payments to 
the Airport. According to Ms. Diane Artz of the Airport, 
China Airlines, Ltd. and Asiana Airlines, Inc. both 
presently rent warehouse space outside of the Airport 
because there is not sufficient space within the Airport to 
meet the needs of all airlines desiring warehouse space. 
The West Field Cargo Building under construction 
replaces the former "Airborne Building" that was 
damaged in the Loma Prieta earthquake and was 
subsequently demolished in 1989. The new West Field 
Cargo Building, therefore, is not part of the Airport's 
Master Plan Program and was primarily funded by 
FEMA monies. 



Board of Supervisors 

Budget Analyst 

24 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Under the proposed leases, China Airlines, Ltd. and 
Asiana Airlines, Inc. would both use the West Field Cargo 
Building to conduct air cargo related business including 
receiving, delivery, dispatching, processing and storage of 
air cargo and mail and for no other purpose. 

Item 8, File 00-1245 : This new lease provides for Korean 
Air Lines, Ltd. to occupy warehouse and office space in 
the Airport's North Field Cargo Building I, to be located 
in the North Field Area of the Airport. The North Field 
Cargo Building has been constructed in phases at an 
estimated cost of $59,000,000. Federal Express 
Corporation and Nippon Cargo Airlines, Inc. (NCA) will 
be the other tenants of the North Field Cargo Building. 
Federal Express Corporation has already taken occupancy 
of its respective portion of the North Field Cargo 
Building, while NCA will take occupancy before the end of 
2000. According to Ms. Artz, construction costs will be 
reimbursed to the Airport through the tenants' annual 
rental payments to the Airport. Korean Air Lines, Ltd. 
presently rents warehouse space outside of the Airport 
because there is not sufficient space within the Airport to 
meet the needs of all airlines desiring warehouse space. 
The North Field Cargo Building is intended to enhance 
utilization of North Field acreage and increase aircraft 
access to the area. This new Cargo Building replaces 
Hangar C-01, which has been demolished, to 
accommodate additional cargo activity in accordance with 
the Airport's Master Plan Program. 

Under the proposed lease, Korean Air Lines, Ltd. would 
use the North Field Cargo Building to conduct air cargo 
related business including receiving, delivery, 
dispatching, processing, handling and storage of air cargo 
and mail. 

Lessor: City and County of San Francisco, acting by and through 

its Airport Commission 

Lessees: Item 6, File 00-1197 : China Airlines, Ltd. 

Item 7. File 00-1201 : Asiana Airlines, Inc. 

Item 8, File 00-1245 : Korean Air Lines, Ltd. 

Board of Supervisors 
Budget Analyst 

25 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



Number of Sq. Ft. 



Item 6, File 00-1197 : China Airlines will occupy a total 
of approximately 38,821 square feet of exclusive space in 
the West Field Cargo Building, including 33,535 square 
feet of warehouse space, 5,286 square feet of office space 
and eleven truck dock positions. Total space in the West 
Field Cargo Building is approximately 67,340 square feet 
of warehouse space and 74,740 square feet of office space. 

Item 7, File 00-1201 : Asiana Airlines will occupy a total 
of approximately 39,874 square feet of exclusive space in 
the West Field Cargo Building, including 34,887 square 
feel of warehouse space, 4,987 square feet of office space 
and eleven truck dock positions. Total space in the West 
Field Cargo Building is approximately 67.340 square feet 
of warehouse space and 7 17 10 square feet of office space. 

Item 8, File 00-1245: Korean Air Lines will occupy a 
total of approximately l!*,700 square feet of exclusive 
space in the North Field Cargo Building, including 18,500 
square feet of warehouse space, 1,200 square feet of office 
space and four truck dock positions. Total space in the 
North Field Cargo Building is approximately 188,000 
square feet of warehouse space and 39,000 square feet of 
office space. 



Amount Payable 
to Airport: 



Items 6 and 7. Files 00-1197 and 00-1201 : The 

proposed leases for the West Field Cargo Building would 
require China Airlines and Asiana Airlines to each pay 
the Airport an annual rent which is the greater of the 
Cost Amount 1 or the Market Value Amount 2 of their 
respective portions of the Cargo Building. According to 
Ms. Artz. the City's appraisals of the Cost Amount or the 
Market Value Amount may be conducted by the Airport or 
by the Department of Real Estate. The City will 
determine the exact Cost Amount and the Market Value 
Amount on or before 90 days prior to the date that the 



1 Cost Amount is the sum of (a) projected annual prorated debt service incurred by the City 
attributable to the design and construction of the Facility, (b) the current appraised land value, (c) 
the projected annual operating and maintenance charges for the Facility, and <d) related 
administrative charges incurred by the City. 

2 Market Value Amount is the rent a third party would be willing to pay to lease the Facility, based 
on (a) the size, location and age of the Facility, (b) the quality of construction of this new Facility (c) 
services provided under this proposed lease, and (d) the rental being obtained for new leases of space 
at the Airport. 

Board of Supervisors 
Budget Analyst 

26 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



first rental payment to the Airport is due. At this time 
Ms. Artz estimates that the rent payable by China 
Airlines and Asiana Airlines to the Airport will be at the 
Market Value and will range from $18 to $19 per square 
foot per year, or from $698,778 to $737,599 annually for 
China Airlines, based on its occupancy of 38,821 square 
feet and from $717,732 to $757,606 annually for Asiana 
Airlines, based on its occupancy of 39,874 square feet. 
According to Ms. Artz, the Airport conducted a survey of 
comparable warehouse space in the area to determine the 
Market Value Amounts of $698,778 to $737,599 annually 
for China Airlines and $717,732 to $757,606 annually for 
Asiana Airlines. Ms. Artz further states that these 
amounts, which represent the fair market value, are 
estimated to be more than the capital costs of each 
respective airline's components of the building and the 
Airport's annual operating and maintenance costs of each 
respective airline's components of the building. 

The proposed leases also provide for annual increases in 
the rent based on increases in the Consumer Price Index. 
In the sixth year of each of the proposed leases, the 
annual rental payments to the Airport will be adjusted 
upward to a new Market Value Amount as determined by 
a City reappraisal of the Cargo Building, and the 
subsequent annual increases in the rent will be made 
based on increases in the Consumer Price Index through 
the end of the lease. 

Item 8, File 00-1245 : The proposed lease would require 
Korean Air Lines, Ltd. to pay the Airport an annual rent 
of $421,974, subject to adjustments upward. This rent 
amount is based on the rental rate of $21.42 per square 
foot per year for the 19,700 square feet, which the Airport 
established by determining which is the greater of the 
Cost Amount or the Market Value Amount as described 
above. The proposed rent amount of $21.42 per square 
foot per year was determined to be the Cost Amount of 
occupancy of the North Field Cargo Building by the 
Department of Real Estate when leases were established 
for Federal Express and Nippon Cargo Airlines, the other 
tenants of the building. According to Ms. Artz, the $21.42, 
which is at least equal to the fair market value, is 
estimated to recover the capital costs of Korean Air Lines, 
Ltd.'s components of the building, as well as to fully 

Board of Supervisors 
Budget Analyst 
27 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

reimburse the Airport for the Airport's annual operating 
and maintenance costs of Korean Air Lines, Ltd.'s 
components of the building. 

The proposed lease also provides for annual upward 
adjustments in the rent based on increases in the 
Consumer Price Index. However, in the event that Korean 
Air Lines exercises the option to extend the term of the 
lease, the annual rental payment to the Airport will be 
adjusted upward to a new Market Value Amount as 
determined by a City reappraisal of the Cargo Building, 
and the subsequent annual increases in the rent will be 
made based on increases in the Consumer Price Index 
through th<' end of the lease. 

Terms of Leases: Item 6. File 00-1197 : The proposed lease would be for 

ten years and four months, estimated to begin in 
September of 2000 when China Airlines begins its four 
month tenant improvement program, and to end in 
December of 2010. The cost of tenant improvements will 
be approximately $220,500 and will be paid in total by 
( Ihina Airlines. 

Item 7, File 00-1201 : The proposed lease would be for 
ten years and four months, estimated to begin in 
September of 2000 when Asiana Airlines begins its four 
month tenant improvement program, and to end in 
December of 2010. The cost of tenant improvements will 
be approximately $220,500 and will be paid in total by 
Asiana Airlines. 

Item 8, File 00-1245 : The proposed lease would be for 
five years and three months, estimated to begin in 
November or December of 2000 when Korean Air Lines 
begins its three month tenant improvement program, and 
to end in January 7 or February of 2006. The Lease also 
contains a provision for a five year option to extend at the 
discretion of the tenant. The cost of tenant improvements 
will be approximately $240,450 and will be paid in total 
by Korean Air Lines. 

Description: Items 6 and 7, Files 00-1197 and 00-1201 : The Airport 

is constructing a new West Field Cargo Building to 
provide cargo warehouse space. Completion of the 
construction of the West Field Cargo Building is 

Board of Supervisors 
Budget Analyst 
28 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

scheduled for September of 2000 at which time China 
Airlines and Asiana Airlines will take occupancy of their 
respective portions of the Cargo Building. 

Item 8, File 00-1245 : The Airport is constructing a new 
North Field Cargo Building to provide cargo warehouse 
space as part of the Airport's Master Plan Program. 
Completion of the construction of the North Field Cargo 
Building and aircraft parking positions on the airfield 
side of the building is scheduled for November or 
December of 2000, at which time Korean Air Lines, Ltd. 
will take occupancy of its portion of the Cargo Building. 

Comments: 1. On June 6, 2000, the Airport Commission adopted 

Resolutions Nos. 00-0212, 00-0213 and 00-0211 
recommending the award of leases without undergoing a 
competitive bidding process, to the proposed lessees, 
China Airlines, Ltd., Asiana Airlines, Inc. and Korean Air 
Lines, Ltd., respectively. 

2. Section 2A.173 of the City Administrative Code states 
"The Airport Commission shall have power to negotiate 
and execute leases of airport lands and space in airport 
buildings, without necessity for competitive bidding, to 
any person, firm, or corporation engaged in air 
transportation ... provided, that the original term of any 
such lease shall not exceed 50 years, nor shall any 
extension of such lease exceed a period of 50 years." 

3. According to Ms. Artz, the leases with China Airlines, 
Ltd., Asiana Airlines, Inc. and Korean Air Lines, Ltd., 
were recommended without soliciting competitive bids 
because the Airport has the authority to make such 
awards pursuant to the Administrative Code as cited in 
Comment No. 2 above, and because the Airport examines 
a criteria which includes (1) Metric Tonnage of cargo 
handled in a year; (2) whether an Airline is under a Lease 
and Use Agreement; (3) the quality and stability of an 
Airline; and (4) the types of cargo carried and 
opportunities for growth, to select airline tenants. Ms 
Artz states that this selection method is designed to 
promote competitiveness among the airlines. Ms. Artz 
further reports that China Airlines was chosen for space 
in the new Cargo Building because it is the only high 
tonnage airline operating under a Lease and Use 

Board of Supervisors 
Budget Analyst 
29 



Memo to the Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Agreement currently without cargo space on Airport and 
that Asiana Airlines, Inc. and Korean Air Lines, Ltd. were 
chosen for space in the new Cargo Buildings because they 
were found to best meet the criteria described above. 

4. Ms. Artz reports that approximately 64,467 square feet 
of office space will remain in the West Field Cargo 
Building after China Airlines and Asiana Airlines take 
occupancy. Ms. Artz further states that the Airport is 
currently in discussions with the United States Customs 
Service to lease approximately 16,700 square feet of office 
space and with the United States Department of 
Agriculture to lease approximately 15,000 square feet of 
office space. Ms. Artz reports that the Airport is confident 
of finding other tenants to occupy the remaining 
approximately 32,767 square feet of office space and in 
the event that the United States Customs Service and the 
United States Department of Agriculture do not lease the 
office space, the Airport is certain that other tenants will 
be found to occupy the remaining space. 

Recommendations: The Budget Analyst considers approval of the proposed 
resolutions to be a policy matter for the Board of 
Supervisors because the leases were awarded to the 
airlines without undergoing a competitive bidding 
process. However, in accordance with City Administrative 
Code, the Airport does have the authority to award such 
leases without competitive bids. 



Board of Supervisors 
Budget Analyst 

30 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



Item 9 - 00-1230 

Department: 

Item: 



Services to be 
Performed: 



Description: 



Airport 

Resolution approving the Controller's certification that 
shuttle bus services for San Francisco International 
Airport's Long-term Parking Lot and the Employee 
Garage DD can continue to be practically be performed by 
private contractor at a lower cost than if similar work 
were performed by City and County employees. 

Shuttle bus services for San Francisco International 
Airport's Long-term Parking Lot and Employee Parking 
Garage, located at the North end of the Airport on South 
Airport Road. 

Charter Section 10.104 provides that the City may 
contract with private firms for services which can be 
practically performed for a lower cost than similar work 
by City and County employees. 

The Controller has determined that contracting for the 
shuttle bus services at the Airport for FY 2000-2001 
would result in estimated savings as follows: 







Lowest 


Highest 






Salary 


Salarv 




Citv-Operated Service Costs 


Step 


Step 




Salaries 


$2,974,380 


$3,952,351 




Fringe Benefits 


895.180 


1.048.917 




Total 


3,869,560 


5.001,268 




Contractual Services Cost 


4.108,800 


4.108.800 




Estimated Savings 


($239,240) 


$892,468 


Comments: 


1. Shuttle bus services consist 


of providing 


; free ground 



transportation to airline passengers and employees 
between both the Airport long-term parking lot and the 
employee parking garage and the Airport terminals. 

2. Shuttle bus services for San Francisco International 
Airport were first certified as required by Charter Section 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

31 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



10.104 in FY 1974-75 and have been contracted out 
continuously since then. 

3. According to Mr. Daniel Pino of the Airport, the 
Airport awarded a ten-year contract for the operation of 
On-Airport Shuttle Bus services to SFO Shuttle Bus 
Company, effective January 1, 1998. The proposed 
resolution would approve the Controller's certification for 
the third full fiscal year of the ten-year contract, from 
July 1, 2000 through June 30, 2001. 

4. The Budget Analyst notes that the Controller has 
determined that the Contractual Services Cost would be 
$892,468 less costly to perform when compared to the 
City's Highest Salary Step employees, but would be 
$239,240 more expensive when compared to the City's 
Lowest Salary Step employees, as shown on the previou- 
page. According to Mr. Joe Matranga of the Controller's 
Office, the estimate of City-Operated Service Costs at the 
Lowest Salary Step of $3,869,560 were calculated using a 
new Muni trainee rate for Transit Operators for six 
months combined with the rate for a first salary step 
Transit Operator for six months. Mr Matranga reports 
that the actual cost of service if performed by City 
employees would most likely be closer to the estimate of 
City-Operated Service Costs at the Highest Salary Step of 
$5,001,268 because it would not be feasible to hire all 
Transit Operators for the shuttle bus service at the lower 
trainee rate. Therefore, Mr. Matranga advises that the 
Controller's Office has certified that the proposed 
Contractual Services Cost is less costly than if similar 
work were performed by City and County employees. 

5. The Contractual Service Cost used for the purpose of 
this analysis is based on the SFO Shuttle Bus Company 
projected FY 2000-2001 costs to provide the shuttle bus 
service at the Airport, according to Mr. Pino. 

6. The estimated FY* 2000-2001 Contractual Service Cost 
of $4,108,800 is $423,214 or 9.3 percent less than the FY* 
1999-2000 cost of $4,532,014. 

7. The Controller's supplemental questionnaire with the 
Department's responses is attached to this report. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

32 



Memo to Finance and Labor Committee 

July 26. 2000 Finance and Labor Committee Meeting 

Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

33 



Attachment 



CHARTER 10.104.15 (PROPOSITION 1) QUESTIONNAIRE 

Department AJrport Commission 

Contnia Services: Airport ShuaJe Bus Servi( es 

Contract Period: July I, 2000 to June 30, 2001 

1 ) Who performed the activity/service prior to ec itraalng out? 

Wkh construction of the Remote Public Parkin* Fadfrry In 1 975, shuttle bus service was 
Initiated by contract. Prior to 1 975, me area vas utllhed as a small lot for SFIA employee 
parking. An employee van service was provide j by Airport Parking Management (APM). 

2) How many Qcy employees were bid off as a n suit of contracting out? 
None (See #1) 

J) Explain the disposition of employees If they wei e not laid off. 
N/A(See#1) 

4) What percentage of City employees' time is sp« nt on services to be contracted out? 
N/A(See#1) 

5) How long have the services been contracted ou ? Is this likely to be a one-time or an ongoing 
request for contracting out? 

Since 1975. The current contract commenced on January 1 , 1 998 for a 10-year period with 
up to five additional one-year options. 

6) What was the first fiscal year for a Proposition ) certification: Has It been certified for each 
subsequent year? 

1974-1975. Yes, it has been certified each ye. t since. 

7) How will the services meet the goals of your Ml E/WBE Acuon Plan? 

Although this contract was not awarded to a Mi .E/WBE firm In 1996, It must adhere to the 
Cry's non-discrimination ordinance contained ir Chapters 1 2B 6t 1 2C of the dry's 
Administrative Code. This contract also corralr s MBE/WBE goals, which the Contractor must 
meet. 

8) Does the proposed contract require that the cor tractor provide health insurance for Its 
employees? Even If not required, are health bet efits provided? 

The contract does not require health Insurance. However, the contractor provides health 
Insurance for Its employees per a labor agreemei it. 

9) Does the proposed contractor provide benefits i > employees with spouses? If so, are the same 
benefits provided to employees with domestic p. rmers? If not, how does the proposed 
contractor comply with the Domestic Partners o dinance? 

The contractor provides benefits to spouses and jomestic partners. 



Department Representative: 




r/J& 



acsyjrzp 



)uke Brtsc x, Deputy Airport Director • Operations 
Telephone Number (650)82-5010 

H:DPlno/WPDOCs/05033A9.DP 1 



34 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Item 10 - File 00-1239 



Department: 
Item: 



Services to be 
Performed: 



Department of Administrative Services (DAS) 

Resolution concurring with the Controller's certification 
that convention facilities management, operation and 
maintenance services can continue to be practically 
performed at Bill Graham Civic Auditorium and Moscone 
Center by a private contractor for lower cost than similar 
work services performed by City and County employees. 

Convention facilities management, operation and 
maintenance 



Description: 



Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for 
convention facilities management, operations and 
maintenance services at the Bill Graham Civic 
Auditorium and Moscone Center for FY 2000-2001 would 
result in the estimated savings as follows: 



Citv-Qperated Service Costs 

Salaries 
Fringe Benefits 
Total 

Contractual Services Cost 

Estimated Savings 



Lowest 

Salary 

Step 


Highest 

Salary 

Step 


$9,212,712 

2,569.540 

11,782,252 


$10,819,989 

2.822.093 

13,642,082 


11.395.806 


11.395.806 


$386,446 


$2,246,276 



Comments: 



1. Moscone Joint Venture, consisting of SMG and 
Thigpen Limited, Inc., is fully responsible under the 
direction of the City, for managing, operating and 
maintaining the Bill Graham Civic Auditorium and 
Moscone Center. Specifically, Moscone Joint Venture's 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

35 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee M- 'tin- 



responsibilities include: (1) contracting with others for 
their use of the convention f.K llit k - (2) promoting the use 
of the convention facilities; (3) conducting event 
management activities; (4) recruiting, employing, 
supervising and paying employees; and (5) maintaining 
the convention facilities and the equipment therein. 

2 Convention facilities management, operation and 
maintenance services at Bill Graham Civic Auditorium 
and the Moscone Center were first certified as required by 
Charter Section 10.104 in 1981 and have been contracted 
out continuously since then. According to Mr. John 
Noguchi of Convention Facilities Management. Moscone 
Joint Venture has been the contractor for these services 
since 1991 

3. Mr. Noguchi reports that the Department of 
Administrative Services awarded a five-year contract for 
the provision of convention facilities management, 
operations and maintenance services at Bill Graham Civic 
Auditorium and the Moscone Center to Moscone Joint 
Venture, effective July 1, 1999. The proposed resolution 
would approve the Controller's certification for the second 
I year of the five-year contract, from July 1, 2000 to 
June 30, 2001. 

3. The Contractual Services Cost used for the purpose of 
this analysis is the Moscone Joint Venture's projected FY 
2000-2001 costs to provide convention facilities 
management, operation and maintenance. 

4. The Contractual Services Cost of $11,395,806 for FY' 
2000-2001 is $862,900 or 8.2 percent more than the FY* 
1999-2000 cost of $10,532,906. 

5. The Controller's supplemental questionnaire with the 
Department's responses is attached to this report. 



Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

36 



Attachment 
CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: San Francisco Convention Facilities 
CONTRACT SERVICES: Operations 



CONTRACT PERIOD: _ July 1, 2000 - June 50. 2001 



(1) Who performed me activity/service prior to contracting out? 

City 

(2) How many City employees were laid off as a result of corrtracting out? 

None 

(3) Explain the disposition of employee* if they were not laid off. 

Employees went to work for the contractor. 

(4) What percentage of City employee*' time % *pent of serves* to be co n trac te d out? 

0Z 

(5) How long have the service* been contracted out? Is this likefy to be a one-time or an ongoing 
request for contracting our? 

19 Years 

(6) What was the first fiscal year for a Proposition J ce r tifi cat i on ? Has it been certified for each 
subsequent year? 

1982 - 1983. Yes. 

(7) How will the service* meet the goal* of your MBE/WBE Action Ran? 

Contractor is a joint venture with a minority principal. 

(5) Does the proposed co n tract require that the contractor provide hearth insurance tor Its employee*? 
Even if not required, are health benefits p rovrie d ? 

Yes. 

(9) Does the propo se d c ontracto r provide benefits to employees with spouses? tf so. are the same 
benefits provided to e m ployees with d om estic partners? tf not. how does the proposed contractor 
compry with the Domestic Partners o rdi na n c e? 

Yes 

Department Representative John Noguchi ___ 

Telephone Number . . 974-4027 



37 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Item 11 - File 00-00-1241 



Department: 
Item: 



Treasure Island Development Authority 

Hearing to consider the release of $345,325 reserved 
funds for the Treasure Island Project, which includes (a) 
release of $215,325 to fund an extension of the Treasure 
Island Development Authority's contract for 
environmental monitoring services for the six-month 
period from July 1, 2000 through December 31, 2000, and 
(b) release of $130,000 to fund an Environmental Impact 
Report for the conveyance of former naval station 
Treasure Island to the Authority. 



Amount: 
Source of Funds: 



Description: 



$345,325 

General Fund monies of $500,000 appropriated and 
placed on reserve by the Board of Supervisors in the FY 
1999-2000 Treasure Island budget. The Finance and 
Labor Committee approved release of $154,675 of the 
$500,000 on February' 9, 2000 (File No. 00-0181) and 
continued to reserve $345,325. 

During the FY 1999-2000 budget review, the Board of 
Supervisors placed $500,000 on reserve, pending the 
establishment of a contract for monitoring the Navy's 
environmental investigation and remediation program of 
the former Treasure Island naval station. The Finance 
and Labor Committee approved release of $154,675 of the 
$500,000 on February 9, 2000, to fund a contract with 
Geomatrix, Inc., retaining $345,325 on reserve. The 
contract with Geomatrix was to provide oversight of the 
U.S. Navy's environmental investigation and remediation 
program on Treasure Island for the period from January 
1. 2000 through June 30, 2000. The Treasure Island 
Development Authority ("Authority") is now requesting 
release of $345,325, which would include (a) $215,325 to 
extend the contract with Geomatrix retroactively from 
July 1, 2000 through December 31. 2000. and (b) 
$130,000 to fund an Environmental Impact Report vEIR) 
for the conveyance of former naval station Treasure 
Island to the Authority. According to Mr. Robert 
Mahoney of the Authority. Geomatrix has incurred costs 
for attending meetings after June 30, 2000 prior to 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

38 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

obtaining approval from the Finance and Labor 
Committee for the release of requested funds. Mr. 
Mahoney states that Geomatrix has not initiated any new 
work, such as field sampling or testing, after June 30, 
2000. Mr. Mahoney states that Geomatrix has not yet 
submitted any bills for the work performed after June 30, 
2000. 

Budget: The summary budget for the requested release of 

$215,325 of the $345,325 in reserved funds to pay 
Geomatrix to monitor the Navy's clean up of Treasure 
Island naval station is as follows: 

Scheduled technical meetings $15,000 



Supplemental technical meetings 


45,000 




Document review 


45,000 




Interim data review 


15,000 




Field oversight and sample 


60,000 




Project tracking 


10,000 




Subtotal 




190,000 


Contingency (11.8 percent) 




25.325 


Total 




$215,325 



The Attachment, provided by the Department of Public 
Works (DPW), contains details to support the budget 
noted above, including the hours and hourly rates for each 
of the specified activities. 

Comments: 1. In addition to the requested release of $215,325 of the 

$345,325 on reserve noted above, the Authority is 
requesting release of $130,000 to prepare an 
Environmental Impact Report for the transfer of the 
former Treasure Island naval station from the Navy to 
the City. According to Ms. Hillary Gitelman of the 
Planning Department, transfer of the former Treasure 
Island naval station requires two environmental 
evaluations. Ms. Gitelman states that the Navy must 
provide an Environmental Impact Statement (EIS) that 
complies with the National Environmental Protection Act 
(NEPA) and the Authority must provide an 
Environmental Impact Report (EIR) that complies with 
the California Environmental Quality Act (CEQA). The 
Navy and the City began working together on a joint 
EIR/EIS for the disposal and reuse of Treasure Island in 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

39 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



1996. In 1998 the Planning Commission adopted 
environmental baseline conditions in accordance with the 
CEQA. Ms. Gitelman advises that the City and the Navy 
have been unable to prepare a joint EIS/EIR because the 
Navy has not addressed the City's concerns about the 
draft report's compliance with CEQA. The Authority, 
upon the recommendation of the Planning Department, 
has determined that it is necessary to prepare a separate 
CEQA report in preparation for the transfer of Treasure 
Island from the Navy to the Authority. 

2. Ms. Gitelman advises that the Authority will issue a 
Request for Proposal (RFP) for a consultant to prepare the 
EIR upon Board of Supervisors approval of the proposed 
release of $130,000 and will select the consultant in 
September or October of 2000. Ms. Gitelman states that 
consultant would modify and update the draft EIR/EIS 
prepared jointly by the City and the Navy, prepare a final 
draft of the EIR and prepare the final EIR. The Authority 
has not yet selected a contractor and therefore, has not 
submitted budget details to the Finance and Labor 
Committee. 

3. According to Mr. Robert Mahoney of the Authority, the 
Navy initiated an Installation Restoration (IR) Program 
to identify and investigate potential hazardous waste 
sites on Verba Buena and Treasure Islands. Mr. 
Mahoney states that 25 IR sites were originally selected 
for investigation and remediation under the Federal 
Comprehensive Environmental Response, Compensation, 
and Liability Act (CERCLA). These 25 sites were grouped 
into Onshore and Offshore Operating Units. The subject 
contract with Geomatrix to monitor the Navy's 
environmental investigation and remediation program of 
Treasure Island is primarily for monitoring the Navy's 
environmental investigation and remediation of Site 12, 
one of the 25 IR sites, which includes 530 of Treasure 
Island's 904 housing units. According to Mr. Mahoney. 
the Authority expects that the Navy will finish the 
environmental investigation and remediation of Site 12 no 
later than December 31, 2000. Mr. Mahoney states that 
the Authority will need to continue monitoring the Navy's 
environmental investigation of the other 24 Onshore and 
Offshore IR sites for a period of approximately 12 months. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

40 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

through July 1, 2001, with remediation actions continuing 
at least through July of 2003. Mr. Mahoney states that 
Treasure Island included $250,000 in the FY 2000-01 
budget for ongoing monitoring of the Navy's investigative 
activities at the other sites, in addition to the monitoring 
of Navy's investigative work at Site 12 which is the 
subject of this request for release of $215,325. 

Recommendations: 1. Approval of the release of $215,325 in funds reserved 
by the Board of Supervisors to fund a contract with 
Geomatrix is a policy matter for the Board of Supervisors 
because the contractor has incurred costs prior to Board of 
Supervisors approval. 

2. Continue to reserve $130,000 to pay for a consultant to 
prepare the EIR, pending the selection of a contractor and 
submission of budget details to the Finance and Labor 
Committee. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

41 



Attachment 



Tuk& Staffing 

1 ask One: Regularly Scheduled Technical Meetings 

Principal (occasional up m 10 hours) @ S165-180 per hour 

SpcciAJizod senioi staff ( toxicoingist, hydrugeologiflt) up w 75 noun. :g $135 

Associate Staff up u> 20 hours @ S^"5-S105 per hour 

Support Staff as needed S49-S75 per hour 

Task Two: Supplemental Technical Meidngi 

rYincipal (occasional up to 10 hours) @ $165-180 ]>cr hour 

Specialized senior staff( toxicologic, hydmgeologui) up to 150 hour* r£ $135 

Associate Staff up to 150 hours ft) S95-S105 per hour 

Support SuIT up to 100 hours i49 $75 per hour 

Task Three: Do. nmeni Review 

Principal (occasional up to 20 hums) (q, $165-181) pa hour 

Specialized >r.nior staff ( lexicologist, hyrirojoologisl) up to HO hours (@ $135 

Associate Staff up to 150 hours @ S95-$105 per hour 

Support Staff up to 90 hours S49-$75 per hour 

Task boar. Interim DoU Review 

Priucipal (occasional up to 1 hours) @ $ 1 65- 1 80 per hour 

Specialized senior itaff( toiocolopst, hydrogeolofpst) up to 75 hours ^| S135 

Associate Staff up to 20 hours @ $95-5105 per hour 

Support Staff as needed $49-$75 per hour 

Task Frve: Field Oversight &. Sample rollecbon 

Principal (occasional up to 30 hours) % $165-1 8U per hour 

Specialized sauor suff ( toxicolORisi. nydroeeolo$ist) up to 200 Lours % S135 

Associate Suff up to 20 hours @ $95 $105 per hour 

Support Staff as needed $49 $75 per hour 

Laboratory Posts 

Task Six: Project '1 rocklns; 

Principal (occacioual up to hours) ^j) S165-180 per hour 

Specialized senior staff ( loxicologist, hydrogcologist) up 2U hours © $1*5 

Associate Staff up tn 50 hours @ $9v$105 per liour 

Suppon Srarf as needed 549-S /5 per hour 

Task Seveu: Contingent.;. 



Sl2,000 

1,800 
10.125 
2,100 

975 

W5,000 

1,800 
20.250 
13,750 

,'.200 

S4S.0O0 

3.600 
1K.900 

6.750 

S1S.0O0 

1.800 

10,125 

2,100 

975 

S60.OOO 

5,400 

27,000 

2,100 

500 

S25.00U 

510,000 



2.70U 
5.250 

2.0SO 

S25.500 



C:\My Oowmr»t«C«io«<!ttVC;«!T»rrtr&;-^^C wcnuior 



** TOTAL PQQ5, 



42 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

Item 12- File 00-1059 

Department: Public Utilities Commission (PUC) 

Item: Resolution adopting findings pursuant to the California 

Environmental Quality Act (CEQA) declaring the Bernal 
Property to be surplus and approving an option contract 
for the sale of the Bernal Property to GHC Bernal 
Investors, LLC for the sale price of $126,288,800. 

Description: The Bernal Property is approximately 500 acres of 

unimproved land, owned by the City's Water Department 
under the jurisdiction of the PUC. The property is located 
primarily in an unincorporated area of Alameda County, 
immediately adjacent to the City of Pleasanton. The City 
of San Francisco, through the PUC, intended to develop 
the Bernal Property to include approximately 1,900 
homes, 750,000 square feet of commercial and office space 
and a golf course. 

On August 1, 1996, Alameda County certified an 
Environmental Impact Report (EIR) submitted by the 
City, in accordance with the California Environmental 
Quality Act (CEQA) relative to the proposed development 
on the Bernal Property. On February 15, 2000, the City of 
Pleasanton certified an EIR in accordance with CEQA for 
the Bernal Property for the City's development of the 
parcel, as described above. The proposed resolution would 
find and declare that (1) the Board of Supervisors has 
reviewed and relied upon the Alameda County EIR, the 
City of Pleasanton EIR and the CEQA findings, and in its 
independent judgment, the Board of Supervisors concurs 
with and adopts these findings and conclusions, and (2) 
there is no need to prepare a subsequent EIR because 
there have been no substantial project changes, no 
substantial changes to the project circumstances and no 
new information of substantial importance, since the 
adoption of PUC Resolution No. 00-0144 on May 31, 2000 
that would alter the conclusions set forth therein. 



The proposed resolution would also declare the Bernal 
Property to be surplus to the City's needs and that the 
public interest demands will not be inconvenienced by the 
selling of the Bernal Property. And finally, the proposed 
resolution would approve an Option Contract between the 

BOARD OF SUPERVISOR 
BUDGET ANALYST 

43 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

City and Greenbriar Homes Communities (GHC), Bernal 
Investors, LLC and authorize the General Manager of the 
PUC to execute and perform all of the City's obligations 
under the Option Contract and to transfer the Bernal 
Property to GHC Bernal Investors, LLC. 

GHC Bernal Investors, LLC has paid the PUC a 
nonrefundable $250,000 initial deposit to enter into the 
subject Option Contract, dated June 7, 2000, which is now 
subject to the Board of Supervisors approval. Under the 
proposed Option Contract, GHC Bernal Investors, LLC 
would have the right to purchase all of the approximately 
500 acres of the Bernal Property for $126,288,800, or 
$252,578 per acre, by exercising the proposed Option 
Contract on or before September 29, 2000, and by paying 
the City a $2,000,000 deposit at that time. The dosing 
date for the final sale of the property would be on or 
before October 31, 2000. Under the proposed Option 
Contract, the initial $250,000 deposit and the subsequent 
$2 million deposit would be credited toward the final 
purchase price of $126,288,800. If GHC Bernal Inve- 
LLC does not exercise their option to purchase the Bernal 
Property by September 29, 2000, the PUC would retain 
the initial $250,000 deposit. 

Comments: 1. In August of 1998, the Board of Supervisors approved a 

resolution (File 98-1254) authorizing the PUC to prepare 
and solicit invitations to bid for the sale of the Bernal 
Property and exempted the sale of the Bernal Property 
from Article 1, Chapter 23 of the San Francisco 
Administrative Code, which (1) requires that the Director 
of Property, through the City's Real Estate Department, 
be directly involved with the purchasing or selling of City 
property, and (2) outlines specific advertising, public 
auction and other sale provisions. At the time of the 
Board of Supervisors approval, the PUC indicated that 
since the PUC, over the course of many years had been 
directly involved with the planning and development of 
the property with the City of Pleasanton and Alameda 
County, the PUC should continue to retain control of the 
Bernal Property sale process. At the time, the PUC also 
indicated that the City could proceed to either sell the 
property outright or partner with a private developer and 
share in the risk and profits of developing the property. 

BOARD OF SUPERVISOR 
BUDGET ANALYST 

44 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

In November of 1998, the PUC issued a Request for 
Quotations (RFQ) for development of the Bernal Property. 
In January of 1999, after reviewing the documents 
submitted, the PUC qualified 12 bidders based on their 
financial status, development experience and other 
factors. 

2. In April of 1999, the City sold approximately 11.2 acres 
of the Bernal Property to the Pleasanton Unified School 
District (Resolution No. 340-99) for construction of a 
public elementary school on the site for $3,000,000 in 
cash and $3,400,000 in transferable school fee credits 
required as part of the development of the Bernal 
Property, a total of $6,400,000, or approximately $571,429 
per acre. At the time, a fair market valuation of this 
parcel was $6,580,000 ($587,500 per acre), or $180,000 
more than the purchase price. The PUC had structured 
this sale of property to the School District to include 
reductions in the price of the property, if the Pleasanton 
City Council voted to approve the remaining Bernal 
Property project by January of 2000. However, to date, 
the City of Pleasanton has not approved the proposed 
project for the Bernal Property. Under the proposed 
Option Contract, the developer, GHC Bernal Investors, 
shall purchase the $3,400,000 of school credits from the 
PUC at their full face value when needed by GHC Bernal 
Investors, in addition to the proposed purchase price of 
$126,288,800 for the Bernal Property, for a total cash 
payment of $129,688,800. 

3. Mr. John Malamut of the City Attorney's Office reports 
that after the City of Pleasanton failed to approve or take 
any further action on the Bernal Property, the PUC, with 
the assistance of the Mayor's Office and the City 
Attorney's Office entered into direct negotiations with the 
City of Pleasanton to sell approximately 430 acres of the 
Bernal Property directly to the City of Pleasanton for $50 
million, in exchange for approval of the remaining 70 
acres of Property for development. The remaining 
approximately 70 acres of the Property would then have 
been sold to a potential private developer for at least an 
additional $50 million for a total combined sales price of 
at least $100 million. However, this proposed sale to the 
City of Pleasanton was not authorized by the Board of 
Supervisors. Subsequently, Mr. Malamut advises that in 

BOARD OF SUPERVISOR 

BUDGET ANALYST 

45 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



March of 2000, the City of Pleasanton failed by a slight 
margin to receive the required two-thirds voter approval 
for the $50 million bond measure (Pleasanton Measure I) 
that was necessary in order for the City of Pleasanton to 
purchase their portion of the Bernal Property. 

As a result of the City of Pleasanton's failure to secure the 
necessary funds to purchase a portion of the Bernal 
Property, on April 28, 2000, the PUC issued an amended 
Request for Qualifications and Bids (RFQ/B) to invite 11 
qualified bidders (one of the 12 previously qualified 
bidders dropped out) to submit bids to purchase the entire 
500 acres of Bernal Property. Mr. Malamut reports that 
the PUC received three qualified bids and, on May 23, 
2000. invited these three qualified bidders to submit their 
best and final bids to purchase the Bernal Property 
Attachment 1, provided by Mr. Malamut, identifies the 
criteria that the PUC used for the selection process, the 
three qualified bidders and the amounts bid. Mr. Charles 
Sullivan of the City Attorney's Office advises that GHC 
Bernal Investors was determined to be the most qualified 
bidder by the PUC based on the established criteria and 
the highest immediate purchase price. Mr. Sullivan notes 
that the other two bidders included more speculative 
options with greater risk that the additional funds would 
not be received. On May 30, 2000, the PUC received the 
final bids, discussed in open session and selected GHC 
Bernal Investors, LLC, based in San Jose, as the highest 
qualified bidder in the amount of $126,288,800. 

4. The Budget Analyst notes that the PUC has been 
working with the City of Pleasanton since approximately 
1986, or over 14 years, to obtain development rights 
(known as land use entitlements) to build a mixed-use 
development on the approximately 500 acre Bernal 
Property. Mr. Malamut of the City Attorney's Office has 
advised the Budget Analyst that it is the intent of the 
developer, GHC Bernal Investors. LLC, to secure the City 
of Pleasanton's approval of the land use entitlements 
prior to exercising the proposed Option Contract. 
Alternatively, the developer can decide not to exercise the 
proposed Option Contract, and forfeit the $250,000 initial 
deposit. The Budget Analyst questions how the proposed 
developer, GHC Bernal Investors, LLC. would be able to 
secure approval of such land use entitlements from the 

BOARD OF SUPERVISOR 

BUDGET ANALYST 

46 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 

City of Pleasanton within the stipulated deadline of 
approximately two months, or by the end of September of 
2000, when the proposed Option Contract would need to 
be exercised, recognizing that the PUC has been unable to 
secure such approvals from the City of Pleasanton for over 
14 years. 

5. Mr. Malamut advises that the PUC previously intended 
to develop the subject Bernal Property to include 
approximately 1,900 homes, 750,000 square feet of 
commercial and office space and a golf course. According 
to Mr. Malamut, the PUC has received approval of a 
certified Environmental Impact Report (EIR) (approved 
August 1, 1996), a Development Agreement, a Specific 
Plan and a Zoning Agreement from Alameda County for 
the subject Bernal Property. Mr. Malamut advises that 
the PUC on February 15, 2000 also received approval of a 
certified EIR from the City of Pleasanton, but did not 
receive any additional land entitlement agreements from 
the City of Pleasanton. According to Mr. Malamut, these 
Alameda County and City of Pleasanton approvals would 
be transferable from the PUC to the proposed developer, 
GHC Bernal Investors, LLC. 

In addition, Mr. Malamut advises that under the 
proposed developer's plans, a maximum of 500 homes 
(instead of the City's intended 1,900 homes) and 750,000 
square feet of commercial and office space would be 
constructed, but excluding the originally intended golf 
course. Mr. Sullivan advises that under the proposed 
arrangements, the developer, GHC Bernal Investors LLC, 
apparently intends to develop only approximately 120 
acres of the subject site and to donate the remaining 380 
acres to the City of Pleasanton at no cost, in exchange for 
Pleasanton's approval of the proposed development. Mr. 
Sullivan advises that the proposed Option Contract does 
not require GHC Bernal Investors to donate any land to 
the City of Pleasanton. Neither the PUC nor the City 
Attorney's Office could provide an estimate of the fair 
market v?lue of the site to be donated to the City of 
Pleasanton. The Budget Analyst notes that based on the 
proposed purchase price of $126,288,800 and the 
potentially intended development of only 120 acres of land 
by GHC Bernal Investors, the developer would actually 
pay an average of $1,052,407 per acre of developable land. 

BOARD OF SUPERVISOR 
BUDGET ANALYST 

47 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



6. As shown in Attachment 2, provided by the PUC, from 
approximately June of 1988 through the end of FY 1999- 
2000, the PUC has spent $8,844,046 on this Bernal 
Property development project. Mr. Carlos Jacobo of the 
PUC reports that Water Department revenues were used 
to pay for these expenses. 

7. As previously noted, under the proposed Option 
Contract, GHC Bernal Investors LLC would pay the City 
$126,288,800, approximately $252,578 per acre for the 
proposed 500 acres of Property. GHC Bernal Investors 
LLC would also be required to pay an additional 
$3,400,000 for school credits, or a total of si29.688.800 to 
the PUC. As noted above, the PUC received 
approximately $571,429 per acre, or 126 percent more 
than the proposed purchase price per acre, for 
approximately an 11.2 acre site sold to the Pleasanton 
School District Last year. Although Mr Sullivan advises 
that the City has not conducted an independent appraisal 
of the subject Bernal Property. Mr. Sullivan reports that 
an earlier preliminary draft analysis by an independent 
appraiser had valued the entire 500 acres of the Bernal 
Property at approximately $70 - $75 million, or $140,000 
to $150,000 per acre without the land use entitlement 
approvals from the City of Pleasanton. Furthermore, Mr. 
Sullivan advises that the PUC is not required to 
undertake an appraisal of the property, if an approved 
competitive bid process is completed, as was the case for 
the subject property. 

8. According to the proposed Option Contract, the 
developer had 30 days after the execution of the Option 
Contract to investigate the physical condition of the 
property, including the soils condition and the presence or 
absence of any hazardous materials. Mr. Sullivan advises 
that the Option Contract was executed by the PUC on 
June 7. 2000 and that the 30-day period has now expired. 
The developer. GHC Bernal Investors LLC, has now 
accepted the environmental condition of the Property. 
Furthermore. Mr. Sullivan advises that the PUC is selling 
the Property "as is'", and the developer has released the 
PUC from any claims relating to the Property under the 
proposed Option Contract. 

BOARD OF SUPERVISOR 

BUDGET ANALYST 

48 



Memo to Finance and Labor Committee 

July 26, 2000 Finance and Labor Committee Meeting 



9. Mr. Malamut advises that the PUC currently supplies 
water from wells located on the Bernal Property through 
underground pipes to the nearby Castlewood Country 
Club. Under the proposed Option Contract, Mr. Malamut 
advises that the PUC will retain all water rights to the 
Property and would retain an easement across the Bernal 
Property where the existing water lines are located, at no 
cost to the City. 

10. In addition, Mr. Malamut advises that, under the 
proposed Option Contract, the City will not sell to the 
developer, but will instead retain an approximately three- 
acre parcel of land, not part of the 500-acre Bernal 
Property, that is immediately north of Bernal Avenue. 
According to Mr. Malamut, this three-acre parcel is not 
contiguous with the rest of the property, and is directly 
adjacent to the Pleasanton Civic Center. Mr. Malamut 
advises that the PUC has not yet determined the use or 
disposition of this three-acre parcel. 

11. According to Mr. Phil Arnold of the PUC, the 
proposed $129,688,800 of funds to be received from the 
developer under the proposed Option Contract would be 
deposited into the Water Department's Enterprise Fund. 
Mr. Arnold advises that expenditure of such one-time 
revenues would be subject to future Board of Supervisors 
appropriation approval. 

12. As previously noted, the proposed resolution would 
approve an Option Contract for the sale of the entire 
approximately 500 acres of the Bernal Property in 
Alameda County, adjacent to the City of Pleasanton, to 
GHC Bernal Investors, LLC for the purchase price of 
$126,288,800, or $252,578 per acre. The Budget Analyst 
summarizes the following issues regarding this 
resolution: 

• In April of 1999, the City sold 11.2 acres of adjacent 
property to the Pleasanton Unified School District for 
$3,000,000 cash and $3,400,000 in transferable school 
fee credits, a total of $6,400,000, or approximately 
$571,429 per acre, which is 126 percent more than the 
proposed purchase price of $252,578 per acre. 



BOARD OF SUPERVISOR 

BUDGET ANALYST 

49 



Memo to Finance and Labor Commit I 

July 26, 2000 Finance and Labor Committee Meeting 



An appraisal of the subject Bernal Property has not 
been conducted by the PUC. Such an appraisal could 
be conducted but according to the City Attorni 
Office, an appraisal is not required if an approved 
competitive bid process has been completed. 
GHC Bernal Investors will pay the PUC the full face 
value of $3,400,000 for the school fee credits, when 
needed by GHC Bernal Investors for development, in 
addition to the purchase price of $126,288,800. 
According to the PUC, the PUC received three 
qualified bids for the subject Property and selected 
GHC Bernal [nvestors because they were determined 
in be the highest qualified bid. 

The PUC has been working with the City of 
Pleasanton for over 14 years to obtain land use 
entitlements for the subject Bernal Property, and has 
DOl been successful in obtaining such approvals. 
The PUC has documented $8,844,046 of expenditures 
for consultants, attorneys and staff from Water 
Department Revenues on the Bernal Property project 
from June of 1988 through FY 1999-2000. 
The City has received a non-refundable $250,000 
initial deposit from GHC Bernal Investors for this 
Option Contract. 

GHC Bernal Investors apparently intends to develop 
only approximately 120 acres of the Property and to 
donate the remaining 380 acres to the City of 
Pleasanton at no cost, resulting in a purchase price of 
$1,052,407 per developable acre of land. 
The total $129,688,800 of funds to be received under 
the proposed Option Contract would be deposited into 
the Water Department's Enterprise Fund, subject to 
future Board of Supervisors appropriation approval. 



Recommendation: 



Supervisor Yee 
Supervisor Bierman 
President Ammiano 
Clerk of the Board 
Controller 
Steve Kawa 



Approval of the proposed resolution is a policy matter 
for the Board of Supervisory. ^~y 

Harvey M. Rose 



BOARD OF SUPERVISOR 
BUDGET ANALYST 

50 



JUL-20-2000 16:08 CITY fflTY 6TH FLR 

City and County of San Francisco 

Louise H. Renne 

<£\ City Attorney 
\*i 




Attachment 1 3808 p - 02/17 
Page 1 of T~ 

Office of the City Attorney 

JOHN D. MALAMUT 

Deputy City Attorney 

Direct Dial: (4 1 5) 554-4622 

E-Mail John_malamut@ci.sf.ca. us 



TO: Debra Newman, Budget Analyst's Office 

FROM: John D. Malamut 

Deputy City Attorney 

DATE: July 20, 2000 

RE: Bernal Property Option Contract for Sale 



You have asked for the selection criteria that the Public Utilities Commission relied upon 
at its May 31, 2000 hearing to make its selection of the highest qualified bidder to purchase the 
Bernal Property. The criteria, listed in Section 4 of the 6 amendment to the Bernal Property 
RFP/RFQ, were as follows: 

1. The bidder's proposed initial cash payment for the Bernal Property, which shall be not 
less than $100 million. 

2. The bidder's proposal for additional payment to San Francisco. These may be 
specified amounts on specified dates after the date of close or they may be tied to particular 
development activities. If the proposal includes post-closing payments, the bidder should specify 
the proposed security interest that will be posted or otherwise provided for the benefit of san 
Francisco and furnish a draft copy of such instrument. 

3. The bidder's plan and ability to negotiate with Pleasanton for entitlement that would 
enable the bidder to successfully exercise the option by the option exercise date and thereafter 
close the purchase and sale of the Bernal property, the Commission will consider: (a) the 
bidder's development experience in large projects valued at more than $25 million, with a focus 
on projects located in Alameda County and the City of Pleasanton; (b) a brief summary of the 
bidder's plan for negotiations with Pleasanton for the entitlement of the Bemal Property; and (c) 
the bidder's sources of funds to be used to close the purchase and sale of the Bemal Property. 

After qualifying three development teams based on the initial submissions, the PUC 
asked these qualified bidders to submit best and final bids. The received bids were as follows 
(listed in no particular order): 

a. GHC Bemal Investors, LLC (Greenbriar Homes Communities, Inc): offer was $126,288,800 
initial cash payment. 

b. Lake Herman Investors (comprised of Signature Properties and Shappell Industries of 
Northern California): offer was $123,000,000 initial cash payment, plus 30% of any increased 
value over the Base Purchase Price ($123 m). This additional payment was to be based on an 
appraisal formula that would be performed after the developer obtained certain vested 
development rights from Pleasanton. Essentially, if the appraisal resulted in a value greater than 
$123 m, CCSF would get 30% of the increased value. If however, the value was $123 million or 
less there would be no additional payments. The bidder did not propose any form of security for 
these additional payments. 

City Hall • 1 Dr. Carlton B. Goodiht Place, Suite 375 ■ San Francisco. California 94 ] 02-4682 
Reception: (415)554-4700 • Facsimile: (415)554-4757 

n\_>M— wvjmau>T_'\_T«>9\pucln*«— unnW 



51 



JUL-20-2000 16=08 CITY ATTY 6TH FLR Attachment 1 P. 03/17 

Page 2 of. 2~~ 

City and County of San Francisco Office of the City Attorney 

TO: Debra Newman, Budget Analyst's Office 

DATE: July 20, 2000 

PAGE: 2 

RE: Bemal Property Option Contract for Sale 

c. Pleasanton Park Partners (comprised of Suncrest Homes. Inc., Ponderosa Homes EI, Inc. and 
Keenan Land Company, LLC): this group presented two offers: Offer A - $125,000,000 initial 
cash payment. Offer B - exercise the $2 million option immediately (it was required on or before 
September 29, 2000), extend the period to close the sale transactions an additional 13 months 
beyond October 31, 2000 and at that time pay a initial cash payment of $130,000,000 (minus the 
$250,000 deposit and $2 million option payment). 

I have attached to this memorandum the 6 ,J| Amendment to the Bemal Property RFQ/RFB 
and a letter from the Mayor of the City of Pleasanton to Mayor Brown concerning the 6 :tl 
amendment. If you have any further question, please do not hesitate to contact me. 



t\M*JL&\M**AMUl\l**JTU<y*K.vi ,«r- 



52 



By: BUREAU OF COMM ' L LAND MGMT . ; 4154875200; Jul-20-00 15:47; Page 2/2 

Attachment 2 I 



BERN AL PROPERTY 
EXPENDITURES 

(through 1999-40) 

Consultants 

1 . The Planning Collaborative 

Prime consultant land planning, engineering, environmental 
&. economic professional services 

2. Wendel, Rosen, Black & Dean 

Real estate negotiations & Property Disposition 



ATTACHMENT 



Expenditures 



$4,304,033 



1,150,252 



Consultant subtotal 



5,454,285 



Citv Attorney 

1 . Cost* incurred thru FY 99-00 

Project Ma—ger 

1. Pre-1995 

2. 1995-to present 



138,000 
450,000 



Project Manager subtotal 



2,484,988 



588,000 



4JSBgJ8 County 

1 . Development Application Processing Costs 



225,000 



Estimated to Complete 



Subtotal all 8,752,273 

91,773 
Total $ 8,844,046 



hcm»17/70A)0 4:04Pk 



53 




[All Committees] 

r>v a<- * rG F • Government Document Section 

City and County of $an Francisco Main Library 

IVIeeting Minutes 

^Finance and Labor Committee 

I Xpt \5sf t ^^^ Members: Supervisors Leland Yee, Sue Bierman, Tom Ammiano 
^ 

Clerk: Mary Red 

'( Wednesday, August 02, 2000 10:00 AM City Hall, Room 263 

Regular Meeting 

Members Present: Leland Y. Yee, Sue Bierman, Tom Ammiano. 



Meeting Convened 

The meeting convened at 10:10 a.m. 

000985 [Approving a four-year contract with S.F. Water Alliance to provide Program Management Services for 
PUC Capital Improvement Program] 

Resolution approving the Public Utilities Commission Program Management Services contract with the San 

Francisco Water Alliance. (Public Utilities Commission) 

5/24/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

7/19/00, CONTINUED. Heard in Committee. Speakers: Supervisor Ammiano; Ken Bruce, Budget Analyst's Office; Supervisor Yee; 

Larry Klein, Acting General Manager, Public Utilities Commission (PUC); Mike Quan, Utilities Engineering Bureau, PUC; Harvey Rose, 

Budget Analyst; Victor Macros, Vice President, PUC Commission; Ed Richardson, Bechtel Corporation; John Kluesener, Project 

Manager, Bechtel Corporation; Ted Lakey, Deputy City Attorney. Opposed: David Novogrodsky, Local 21 ; Jim Buker, Department 

Public Works; Jeff Sheehy; Victor Menotti, International Forum; Antonio Diaz, P. ODER.; Chris Daly, Mission Aganda; Daja Bowler; 

Peter Warfield. 

Continued to August 2, 2000. 

Heard in Committee. Speakers: Ken Bruce. Budget Analyst's Office; Edward rimes. Public Utilities 

Commission. 

Continued to August 23, 2000. 

CONTINUED by the following vote: DOCUMENTS DEPT, 

Ayes: 3 - Yee, Bierman, Ammiano 

AUG - 7 2000 



SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco I Printed at 5:24 MM 



Finance and Labor Committee Wetting Minutes \ui;ust 2, 2000 



000852 [Library and Friends and Foundation Agreement! 
Supervisor Kaufman 

Ordinance approving a Memorandum of I ndci standing, dated as of July I, 1999, between the San Franci 
Public Library and the Friends and Foundation nl the San Francisco Public Library ("Friends ami Foundation'') 
tu[ use of space in the Main Library building lor the performance of librar) -related sen ices, generation of 
revenues foi librar) department purposes, and assurance of private funds to provide support on an ongoing 
basis for the San Francisco Public Library System; amending Article XIII, Chapter 10, Part I of the San 
Francisco Municipal Code ("Administrative < ode") bv adding Section 10.1 16-6 thereto, authorizing the City 
Librarian. 01 his oi liei designee, to accept and expend any individual gifts from the friends and foundation of 
a value of $25,000 or less; and authorizing and approving certain agreements to be made between the City and 
the Friends and Foundation as contemplated by such M< H I, including a lease oi office and gift store space and 
an agreement giv mg the Friends and Foundation the right to manage the meeting rooms, auditorium and other 
space for private functions and special events and to charge fees for such uses ( Public Library) 

(Fiscal impact ) 

5/8/00, RECEIVED AND ASSIGNED to Einancc and I abor ( ommiitce 

5/22/00, SUBSTITUTED Submitted by Supervisor Kaufman 

5/22/00, kill I VI D AND ASSIGNED 10 finance and l.abor Committee 

7/19/00, CONTINUED Heard in Committee Speakers Harvey Rose. Budget Analyst. Susan Milldrcth, Acting Cil> Librarian, 

Supers isor Yee; KjIc Petrucionc, Aide to Supervisor Kaufman. Superv isor Bierman Oppose James ChafTcy. Daja Bowler, I amcstine 

Weiss; Peter Wirfield; Ms Simpson. Ciray Panthers 

Continued lo August 2, 2000 

Heard m Committee Speakers Harvey Rose, Budget Analyst, Supervisor Yee Sw.au Hildretk, Acting City 
Librarian. Supervisor immiano, indre Spearman, Local 790, Jim Sutton, Friends and Foundation Board 

Member Barbara Herman Michael HousH, Library Commission ting 

Executive Officer, Friends of Library, Debra Doyle, Richard. Supervisor Bierman Opposed _/,.■■ 
Peter Warfield, Da/a Hauler 

COM IV U I) IO CALL OF I II I ( II UK bv the following vole: 

Ayes: 3 - Yee, Bierman, Ammiano 



001229 [Police Code - Penalties for Non-compliance with Orders of the Port ( onimission| 

Ordinance amending Article 23. of the San Francisco Municipal Code (Police Code), by amending Article 23, 
Regulation for Port Area, Section 1612. non-compliance with orders of the Commission as misdemeanor to 

allow violations to he charged either as a misdemeanor or an infraction with monetary fines (Port) 

(Amends Article 23. Section 1612.) 

ETVED \\i> ASSIGNED to Finance and Labor Committee 
Heard in Committee Speakers Harvey Rose, Budget Analyst, Veronica Sanchi 

R] ( OMM1 MH Dhv the following vote: 
Ayes: 3 - Yee, Bierman. Ammiano 



001254 |Prop J. Contracting out Airport Information Booth Services! 

Resolution approving the Controller's certification that Airport Information Booth Services can practically be 
performed bv private contractor at a lower cost than if work were performed bv ( it\ and County empln 
presently budgeted levels. (Airport Commission) 

0, RECEI\ ED \M> ASSIGNED to Finance and I abor Committee 
Heard in Committee Speakers Han e\ Rose. Budget Analyst. Jon Ballesteros Airport 
RECOMMENDED bv the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 2 Printed at 5:24 PM on 8.200 



Finance and Labor Committee Meeting Minutes August 2, 2000 



001289 [Lease of Property at 10th and Bryant Street] 

Resolution authorizing the lease of real property at 10th and Bryant Street for the Department of Parking and 
Traffic. (Real Estate Department) 

7/12/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Tony DeLucchi, Real Estate Department. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001298 [Post Street Towers Multifamily Housing Revenue Refunding Bonds] 

Resolution authorizing the issuance and delivery of Multifamily Housing Revenue Bonds (as defined herein) 
in an aggregate principal amount not to exceed $17,000,000 for the purpose of refunding Bonds previously 
issued to provide financing for a Multifamily Rental Housing Project; authorizing the sale of the Bonds; 
approving the form of and authorizing the execution of an indenture providing the terms and conditions of the 
Bonds; approving the form of and authorizing the execution of the Bond purchase agreement providing the 
terms and conditions for the sale of the Bonds; approving the form of and authorizing the execution of an 
amended and restated regulatory agreement and declaration of restrictive covenants; approving the form of and 
authorizing the execution of a financing agreement; approving the form of and authorizing the execution of a 
remarketing agreement; approving the form of and authorizing the preparation and distribution of a 
preliminary official statement and the preparation, execution and distribution of an official statement relating 
to the Bonds; approving the form of and authorizing the execution of an intercreditor agreement; approving 
and authorizing the execution and delivery of any document necessary to implement this Resolution; ratifying 
and approving any action heretofore taken in connection with the Bonds, the project and the refunding of the 
prior Bonds; and related matters. (Mayor) 
7/12/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Joe LaTorre, Mayor's Office of Housing; 
Supervisor Bierman; Supervisor Ammiano. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001325 [Violence Against Prostitutes| 
Supervisor Ammiano 

Hearing to inquire into the social etiology of violence perpetrated against prostitutes and strategies to mitigate 
such violence. 

7/17/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. Sponsor requests this item be scheduled tor consideration ai the 
August 2, 2000 meeting. 

Heard in Committee. Speakers: Supervisor Ammiano; Rachel West, U.S. Prostitutes Collective; Chandra 
Redack, Crossroad Women's Center; Ms. Reed; Autumn Burris, SAGE Project; Maty Dunlap. Director. Office 
of Citizen's Complaint, Police Department; Norma Hotaling, Director, SAGE; John Andriotti; Jane Martin. 
Shotwell Street Association; Richard TeriKock, National Lawyers Guild; Betty Traynor; Josan; Soma Melara, 
Executive Director, Commission on the Status of Women; Victoria Schneider, WHORE; Glenda Hope. 
SafeHouse for Women; Lori Nairne, Legal Action for Women; Susan Mortel; Rebecca Young. Criminal 
Attorney; Ruth Todasco, Women in Dialogue; Niki Adams. International Prostitutes Collective, England; 
Linda Klee, District Attorney's Office; Marianne Barrett. District Attorney's Office. Inspector Ed DelCarlo. 
Vice Crimes. Police Department: Betty Ricks, Program Director. Promise; Raymond Barren; Chris Daly. 
Mission Agenda; Agnes Mercurio, SAGE; Tortuga Bi Liberty. Senior Unlimited Nudes, I. on McCormick, 
SAGE; Jeff Bell. Man-A-Live; Sveelana Plvchik, SAGE; Bobhi Sellars, George Williams: Supervisor Bierman 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 3 Primed at 5:24 PM on 8/2/00 



I 'in ami' and Labor Committee Wetting \fiiiutc\ iunu\t 2, 2000 



ADJOURNMENT 



The meeting adjourned at 12 47 p »/ 



City and Count}- of San Francisco 4 Primed at 5:34 P\f on S2V0 



l/CG 



CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



OF SAN FRANCISCO 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



DOCUMENTS DEPT. 

AUG - 1 2000 

SAN FRANCISCO 
PUBLIC LIBRARY 



July 27, 2000 
TO: ^Finance and Labor Committee 

FROM: Budget Analyst 

SUBJECT: August 2, 2000 Finance and Labor Committee Meeting 

Item 1 - File 00-0985 



Note: This item was continued by the Finance and Labor Committee at its 
meeting of July 19, 2000. Since that time, the PUC has provided the 
Budget Analyst with an amended proposed contract to address the 
concerns of the Finance and Labor Committee. This report is based on 
that amended contract. The Budget Analyst notes that the Public 
Utilities Commission has not, as of the writing of this report, formally 
approved the amended contract. 



Department: 



Item: 



Amount: 



Public Utilities Commission (PUC) 

Resolution approving the Public Utilities Commission 
Program Management Services Contract with the San 
Francisco Water Alliance, a joint venture of Bechtel 
Infrastructure Corporation, The Jefferson Company, and 
Sverdrup Civil, Inc. 

Up to $45,000,000 over four years. According to Mr. Michael 
Quan of the PUC, this maximum contract amount comprises 
an estimated (a) $8,000,000 for Contract Year 1. (b) 
$14,000,000 for Contract Year 2, (c) $12,000,000 for Contract 
Year 3, and (d) $11,000,000 for Contract Year 4. 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



According to Mr. Manfred Wong of the PUC, the amount of 
$45,000,000 was initially approved by the PUC 
Commissioners on the basis of an estimated cost of 
$15,000,000 for each of three main categories of work to be 
performed by the Contractor over the term of the subject 
contract. Revised estimates for the relative proportions of 
estimated costs of each of these categories of work, based on 
the data contained in Attachment I (provided by the San 
Francisco Water Alliance and the PUC) and summarized 
under "Proposed Contractor Remuneration" below, are as 
follows: 

(1) The Program Management Office, which would provide 
services to structure, direct, and implement the program 
and to train PUC -i.iif. is estimated to cost 
approximately $22, 000, 000, or approximately 48.9 
percent of the maximum contract cost over the four year 
contract term. 

(2) Project and construction management services and 
technical support services are estimated to cost 
approximately $23, 000, 000 or approximately 51.1 
percent of the maximum contract cost over the four year 
contract term. 

The Budget Analyst notes that these proportions represent a 
significant change from prior information provided by the 
PUC. Whereas the Program Management Office function 
was initially estimated to be approximately 33 percent of the 
total maximum Contractor remuneration, it is now estimated 
to be approximately 48.9 percent even though the PUC 
retains total program management responsibility and does 
not share that responsibility with the Contractor, as 
originally envisaged. Project and construction management 
services and technical support services, which were initially 
estimated to be approximately 67 percent of the total 
maximum Contractor remuneration, are now estimated to 
have reduced to approximately 51.1 percent even though the 
PUC cites its need for technical expertise as one of the key 
reasons for the subject contract. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Source of Funds: 



Description: 



Mr. Wong states that the PUC expects to fund the subject 
contract through existing bonds 1 , operating revenues, and 
future bond proceeds, progressively securing funding as the 
capital improvement program proceeds. Mr. Wong states 
that if future bond funding for the prooosed capital 
improvement program is not approved by the voters or 
funding for the capital improvement program is not 
appropriated by the Board of Supervisors, the Contractor 
would not be requested or paid to perform program 
management services. According to Mr. Wong, the PUC 
believes that over the course of the four year contract term, 
the maximum $45,000,000 cost of the Contractor would be 
more than offset by the anticipated $138,000,000 savings 
generated by the Contractor. The estimated savings of 
$138,000,000 are based on savings of 10 percent for the 
estimated $1,380,000,000 cost of the first four years of the 
capital improvement program. The $1,380,000,000 total cost 
estimate was prepared by PUC staff in 1998 and has not 
been reviewed or adjusted since. A new estimate will be 
included in the anticipated November of 2000 draft of a new 
ten year capital improvement plan, according to PUC staff. 

Under the subject contract, the proposed Contractor would 
provide program management services to the PUC to 
organize and implement its capital improvement program by: 

• Providing specialized expertise in the management of 
very large capital programs. 

• Improving the PUC's engineering and construction 
operations by developing program management and 
control plans, systems, tools, and reports. 

• Providing personnel for workload peaks (except on 
detailed design work). 

• Designing a PUC staff development program. 

• Developing a public information program. 

• Assisting disadvantaged business enterprises. 



1 In November of 1997, San Francisco voters approved S304.000.000 in Water Revenue Bonds. The 
PUC can also utilize $238,000,000 remaining available funds from bonds issued in 1991, 1992, and 
1996 for the replacement of existing facilities and for compliance with Federal and State law. Mr 
Wong advises, however, that funding beyond these approved amounts, which total $542,000,000. is 
uncertain. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



The Budget Analyst's previous report indicated, based on 
information provided in the PUC's RFP, that identification of 
new funding sources for the capital improvement program 
would be one of the tasks to be performed by the Contractor. 
In response to a specific question raised by the Finance and 
Labor Committee about this proposed Contractor role, PUC 
staff now advise that identification of new financing sources 
is not a task required by the subject contract. Instead, this 
work will be done by PUC staff. PUC staff note that (a) the 
PUC's Assistant General Manager for Finance and 
Administration has almost 20 years of financing experience, 
(b) the PUC has issued a RFP for contractual financial 
advisory services (in addition to the subject $45,000,000 San 
Francisco Water Alliance contract), and (c) the PUC's 
Finance Bureau is being reorganized to increase its financial 
planning and debt administration capacity. 

In response to a specific question raised by the Finance and 
Labor Committee about the Contractor's involvement in 
developing a public information program, PUC staff advise 
that existing PUC staff would provide the bulk of the public 
information program effort. However, because the capital 
improvement program involves planning and construction 
work in a number of widely dispersed counties, PUC staff 
believe they will need assistance with public meetings, 
community outreach, informational materials, and media 
relations. PUC Staff state that when special skills or staff 
augmentation is required, the Contractor would provide as- 
needed support services to the PUC's communications staff 
as part of the subject $45, 000,000 contract. 

With regard to assisting disadvantaged business enterprises, 
program participation goals of 30 percent minority-owned 
business enterprise (MBE) participation and 10 percent 
women-owned business enterprise (WBE) participation 
would apply to the first year of the subject contract. In 
response to a specific question raised by the Finance and 
Labor Committee about how the subject contract's 
MBEAVBE goals were determined. PUC staff advise that 
these goals were established in accordance with City 
regulations, practices, and procedures. According to 
information provided by Mr. Quan. the Contractor's actual 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

MBE/WBE participation rate would be in excess of the 
minimum first year requirements. In addition, the Public 
Utilities Commission required, with the concurrence of the 
Human Rights Commission, that MBE program participation 
goals would increase 2 percent annually and WBE 
participation would increase 1 percent annually. The MBE 
and WBE subcontractors which are part of the San Francisco 
Water Alliance are listed in appendices to the subject 
contract. 

Background: In February of 1998, the PUC published a draft of its long- 

term water enterprise capital improvement plan. The plan 
proposed a 12 year capital improvement program comprising 
approximately 200 water projects for a total cost of 
approximately $3,500,000,000 to (a) upgrade the water 
system infrastructure, (b) respond to increasing service 
demands, and (c) fulfil new regulatory requirements. 

Having undertaken initial program planning, the PUC 
proposed contracting out the program management of the 
capital improvement program. The initial concept was for a 
ten year program management services contract 
(renegotiable every four years). Under that proposed 
contract, a chief program management contractor would 
report directly to the PUC Commissioners and contractor 
staff would provide long term assistance to PUC's Utilities 
Engineering Bureau (UEB) staff with a senior consultant 
team reporting to the UEB Manager. The proposed concept 
for the integration of PUC and contractor staff was that they 
would share decision-making responsibilities and would 
share the program risks. 

Following PUC staff members' December 15, 1998 
presentation to the Commission on the proposed capital 
improvement program, the Commission authorized the 
drafting of a Request for Proposals (RFP). As part of the 
RFP drafting process, in February of 1999 the PUC consulted 
with the International Federation of Professional and 
Technical Engineers (IFPTE) Local 21, AFL-CIO. In March 
of 1999, the IFPTE sought an injunction against the subject 
contract on the grounds that (a) Section 10.104 of the City 
Charter prevents contracts with private companies for 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



program management services until the Controller and the 
Board of Supervisors have determined that such work can 
performed under private contract at a lower cost, and (b) its 
members would be unlawfully deprived of public sector work 
they could competently perform at a lower cost. On March 
13, 2000 the San Francisco County Superior Court issued a 
summary judgement in favor of the PUC and against the 
IFPTE on the grounds that Charter Section 10.104 did not 
apply and hiring a program management contractor was 
justified by (a) the urgent need for the capital improvement 
program, (b) the PUCa need for specialized expertise over 
and above its commitment to hire more engineering staff, (c) 
the temporary nature of the program management 
contractors services, (d) the PUC's potential need for 
engineering assistance to staff temporary peak workloads, (e) 
the speculative nature of the IFPTE'a claim that there would 
be duplication or displacement of PUC staff, and (f) the Civil 
Service Commission's approval of the subject contract on 
•June l. L999. According to Ms. Linda Ross of the City 
Attorney's Office, the IFPTE has subsequently filed a Notice 
of Appeal. As of the writing of this report, the Budget 
Analyst has no further information on the status of this 
appeal. 

During the lawsuit, negotiations between the PUC and the 
IFPTE significantly scaled down the subject contract's 
original concept. The RFP, as advertised in July of 1999, was 
for a four year contract not to exceed $45,000,000 (depending 
on availability of funding), in which as-needed contractor 
staff would report to UEB managers. There would be no 
direct reporting line to the PUC Commissioners, PUC 
management would retain full decision-making 
responsibilities, and contractor staff would not directly 
supervise City employees. 

Four private firms and joint ventures submitted bids on 
September 15, 1999. These were: 

• San Francisco Water Alliance, a joint venture of (1) 

Bechtel Infrastructure Corporation, (2) The Jefferson 

Company, and (3) Sverdrup Civil. Inc.. in association with 

Olivia Chen Consultants. Inc.. (b) Carollo Engineers. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



(c) Raines, Melton & Carella, Inc., (d) Cooper Pugeda 
Management Inc., (e) Greg Roja and Associates, Inc., (f) 
Whitted Dawson Associates, Inc., and (g) Orion 
Environmental Associates. 

• The H2O Partnership, a joint venture between (1) 
O'Brien-Krietzberg Associates, (2) CH2M HILL, and (3) 
EPC Consultants, Inc, in association with (a) Cornerstone 
Concilium, Inc., (b) DAJA, Inc., (c) Mendoza and 
Associates, (d) Saylor Consulting Group, (e) JFW 
Consultants, (f) Pendergast & Associates, (g) Butler 
Enterprise Group, (h) Micro Search Environmental, (i) 
Ocampo-Esta Corporation, and (j) Cervantes Design 
Associates. 

• San Francisco Water Associates, a joint venture between 
Parsons Infrastructure and Technology Group Inc., AGS 
Inc., and Don Todd Associates, Inc., in association with 11 
subcontractors. 

• Montgomery Watson Americas, Inc., in association with 
27 subcontractors. 

A team of City staff comprising Ms. Virigina Harmon of the 
Human Rights Commission, Mr. Bill Keany of the PUC, Mr. 
Paul Mazza of the PUC, Mr. Quan, and Mr. Wong reviewed 
all four proposers by means of client site visits during 
November and December of 1999. A four member expert 
evaluation panel then interviewed the four proposers and 
scored each of them against the criteria set out in the RFP 
(as shown in Attachment II). This evaluation panel consisted 
of Dr. Johnnie Clark, a financial consultant, Ms. Margaret 
Leporte, representing the Bay Area Water Users Association, 
Ms. Raynetta Grant, a local government water utility 
engineering manager, and Mr. Kevin Lyons of the PUC. The 
evaluation team scored the H2O Partnership proposal 
highest (with a score of 2.780 2 ) and the San Francisco Water 
Alliance second highest (with a score of 2,700). Montgomery 
Watson Americas, Inc. scored 2,480, while San Francisco 
Water Associates scored 2,460. The PUC Commissioners 
interviewed the top two scoring joint ventures at a public 



- Scores are calculated by multiplying the qualitative score for each one of the six criteria by the 
respective weight to obtain the weighted score for each of the criteria. For example, the weight for 
Criterion 6 (Understanding of SFPUC Program) is 10; therefore, a qualitative score of 5 will 
translate into a weighted score of 50 for an individual evaluator. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

meeting on April 7, 2000, and indicated a preference for the 
San Francisco Water Alliance, subject to successful 
negotiations over contract costs. No reason was given as to 
why the Commissioners gave first preference to the San 
Francisco Water Alliance which had previously received a 
lower score from the expert evaluation panel than the H2O 
Partnership. On May 10. 2000, the PUC awarded the 
proposed contract to the San Francisco Water Alliance 
subject to final contract negotiation and approval of the 
Board of Supervisors. 

Initial consideration of the subject contract by the Finance 
and Labor Committee at its July 19, 2000 meeting resulted 
in the PUC requesting a two week continuance to negotiate 
(a) performance measures for inclusion in the subject 
contract, and (bi greater Board of Supervisors oversight. 
Successful negotiations between the PLC and the San 
Francisco Water Alliance have resulted in agreed 
performance measures (see Comment Mb. 2) and provision for 
annual Board of Supervisors approval to renew the subject 
contract (see "Terms of the Subject Contract" below). The 
PUC has also provided responses to other specific questions 
raised by the Finance and Labor Committee. These 
responses have been incorporated into the text of this report, 
while the PUCs written responses are included in 
Attachment IX (see Comment No. 18). 

The Public Utilities Commission has not yet approved the 
amended contract. According to Mr Wong, Commission 
consideration of the amended contract is scheduled to happen 
after Board of Supervisors consideration of the subject 
resolution. 

Terms of the 

Subject Contract: Key contractual terms and conditions are as follows: 

• The City can. at its sole discretion, terminate the subject 
contract at any time. In response to a specific question 
raised by the Finance and Labor Committee about this 
provision. PIC staff advise that a termination for 
convenience right permits the City to terminate the 
contract at any time during its term, for convenience and 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



without cause. The City can exercise this option by giving 
the Contractor written notice of the effective termination 
date. The subject contract does not mandate advance 
notice of any predetermined length of time. Contractor 
invoices for work undertaken up to the specified 
termination date would have to be submitted to the City 
no later than 30 days after that date. 

The City has no obligation to fund the subject contract in 
lieu of funding other contracts. 

The subject contract can only be extended beyond the 
initial term of four years with the Civil Service 
Commission's approval 3 . 

The PUC controls the Contractor's role and assignments 
in terms of an annual implementation plan based, in part, 
on an annual performance review jointly conducted by the 
PUC and the Contractor. As a result of the annual review 
and the annual implementation plan, the City and the 
Contractor would determine the contractor staffing 
required during the next 12 months and the necessary 
contract budget. 

Contractor and City staff would share City office space 4 
and work in combined teams under PUC managers. 
Existing City staff would be used to the fullest extent. 
City engineers (or third party contractors) are the 
Engineers of Record 5 and construction managers for all 
capital improvement projects. The Contractor obtains 
written authorization from the City before (a) adding staff 
or subcontractors to its team, or (b) supplying personnel 
to provide expert services or to handle workload peaks. 
The Contractor trains PUC personnel in systems, 
techniques, or technology used by the Contractor. 



3 In the opinion of Ms. Ross, any extended contract would require (a) separate Civil Service 
Commission authorization, and (b) Board of Supervisors approval if the extended contract would cost 
the City more than $10,000,000. 

4 According to Ms. Wendy Iwata of the PUC, the PUC plans to spend approximately $300,000 in FY 
2000-01 to renovate City office space for contractor staff. 

5 The "engineer of record" is a State requirement that a certified engineer be legally responsible for 
approving the design of a structure so that it is safe for public occupancy The engineer of record 
assumes liability for the design for both the duration of the contract and for the subsequent 
warranty period. While the proposed contract does not allow the Contractor to assume this role, it 
would permit the Contractor to provide preliminary or conceptual engineering services and prepare 
schematic drawings to the extent necessary to define upcoming capital projects. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



• The Contractor assigns a core team of experienced 
individuals (named in the subject contract's appendices) 
for the duration of the contract. Replacements for key 
personnel are subject to the City's agreement. 

• The Contractor's performance is subject to third party 
audit 1 - 

• The Contractor reports monthly to the PUC on its 
performance. 

• To prevent conflicts of interest, the Contractor and its 
subcontractors cannot bid on PUC design proposals or 
construction contracts during the term of the subject 
contract 

• The Contractor is an independent consultant fully liable 
for its acts and omissions. In response to a specific 
question raised by the Finance and Labor Committee 
about this provision, PUC Btaff advise that, under the 
Bubjed contract, the Contractor has full liability for 
subcontractors. 

• During disputes, the Contractor and subcontractors waive 
all rights to discontinue services or seek any relief which 
would stop or delay the progress of capital improvement 
projt 

The subject contract would have a maximum four year term. 
Within that term, the Controller would be required each year 
to certify the availability of funds for the -ubject contract. 
Under the amended terms of the subject contact, such 
certification would depend upon annual Board of Supervisors 
approval to continue the subject contract . Board of 
Supervisors approval would, in large part, depend upon 
objective evidence, provided by the PUC and verified by an 
independent audit performed by the Controller, that the 
Contractor had performed successfully against negotiated 
performance measures. In the event that the Board of 
Supervisors disapproves continuation, the contract would 
terminate with no liability on the part of the City. In the 
event that the Board of Supervisors does not act to 
disapprove continuation of the subject contract (provided the 
PUC has submitted the necessary performance reports in a 
timely fashion), the subject contract would continue. 



11 According to Mr. Wong, the PUC is in discussions with the roller's Office about the 

Controller's involvement in such audits. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Proposed Contractor 



Remuneration: 



Within an upper cap of $45,000,000 over four years, under 
the subject contract the PUC would pay the Contractor 
through a combination of (a) direct salary costs (not including 
fringe benefits), (b) overhead costs (including fringe benefits), 
(c) a combination of fixed and performance fees, (d) 
administrative fees, and (e) other direct charges. Attachment 
I, provided by the San Francisco Water Alliance and the PUC 
in response to a specific Finance and Labor Committee 
request for an estimated break-down of the $45,000,000 
budget into these five remuneration categories, shows a 
break-down of the $45,000,000 into the four categories shown 
in the Table below (direct salary costs and other direct costs 
are combined). The PUC notes that the remuneration to the 
Contractor shown below could change depending on funding 
availability and the capital improvement projects actually 
undertaken. 





Category 1: 
Direct Salary, 

Overhead, 

Multiplier, and 

Other Direct 

Costs 


Category 

2: 
Fixed Fee 


Category 3: 
Maximum 

Perfor- 
mance Fee 


Category 4: 

Subcontractor 

Administrative 

Fee 


Maximum 
Total 


Program 

Management 

Office 


$19,590,000 


1,240,610 


847,830 


177,230 


21,855,670 


Project and 
Construction 


20.650.000 


1.349.390 


922.170 


192,770 


23.114,330 


Management 












Services, and 
Technical 
Support 
Services 












TOTAL: 


$40,240,000 


$2,590,000 


$1,770,000 


$370,000 


$44,970,000 



At a maximum cap of $45,000,000, the estimated 412,435 
hours of Contractor work, as shown in Attachment I, would 
represent approximately $109 per hour. Due to the lack of a 
PUC staffing projection for the capital improvement program 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



11 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



(see Comments No. 8 and 9), it is not possible to compare this 
hourly rate with the hourly rate of using City employees 
instead. 

(a) Direct salary costs: Under the subject contract, 
direct salary costs would be limited to the actual salaries of 
the Contractor's project managers and technical staff. 
Charges for home office staff such as secretaries, clerks, and 
accountants would be included in the overhead for work 
charged at the Contractor's offices except those working 
directly on the project as approved and budgeted by PUC 
project managers in the relevant task order. The subject 
contract specifies the direct hourly rate for key individual 
contractor staff (ranging in Contract Year 1 between $30.00 
to $76.15 per hour without overhead). The billing rate for 
Contr ff including overhead, which comprises direct 
salary plus a multiplier, is capped at $110. 00 per hour in the 
first year (the PUC General Manager can approve 
exceptions) but can be adjusted in accordance with the 
Consumer Price Index th< Salary rates can be 
adjusted annually by the amount of the change in the 
Consumer Price Index (CPI) for the previou- y 

(b) Overhead Fees: Before the end of the first year of the 
subject contract, the Contractor would arrange for an 
independent audit of the overhead costs applied to direct 
salary costs. According to Mr Wong, this audit would be 
performed by an independent auditor and would be reviewed 
by the Controller's Office in accordance with the standards of 
the Code of Federal Acquisition Regulations. Pending this 
audit, in the first year of the contract (depending on the 
actual results determined by the audit), provisional overhead 

Aould range between (a) 125 and 154 percent of direct 
salary costs for work performed by the prime consultant^ in 
their own offio md 172 percent of direct salary costs 

for work performed by subcontractors in their own offices, (c) 
104 and 115 percent of direct salary costs for work performed 
by the prime consultants in PTC offices or construction sites. 



Adjustments for individual Contractor employees could exceed the maximum CPI movement 
provided that the total adjustment dollars for Contractor employees dedicated to the subject contract 
does not exceed the maximum dollars based on the total direct salary paid on the contract for the 
previous vear plus the CPI. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



and (d) 113 percent of direct salary costs for work performed 
by the subcontractors in PUC offices or construction sites. 
The overhead rates would be adjusted annually, based on the 
annual audit. However, in no case can the audited overhead 
rate for any prime consultant or subcontractor exceed (a) 172 
percent for work performed in their own offices, or (b) 115 
percent for work performed in PUC offices or construction 
sites (117 percent if payroll tax is included). According to 
information provided by Mr. Quan, the negotiated overhead 
rates appear to be comparable with those negotiated for other 
large public sector capital improvement programs. 

(c) Fixed and Performance Fees: In addition to direct 
salary costs and related overhead fees, the Contractor would 
also be remunerated on the basis of the ''performance/at-risk 
fee" arrangement outlined in the Table below, depending on 
the Contractor's achievement of tasks prescribed by the City, 
each task having a specific scope of work, timeframe, 
guaranteed maximum cost structure, savings target, and 
other performance measures. Assuming successful task 
completion, the Contractor receives a fixed fee as a 
percentage of the Contractor's contract billing for that task s . 
Assuming partial or complete achievement of the savings 
target and other performance measures, the Contractor 
receives some or all of an at-risk performance fee as a 
percentage of the Contractor's contract billing for that task. 
The percentage levels for both fixed and performance fees 
vary bv contract vear, as shown in the table below: 



8 "Contract billing" comprises just the Contractor's billing for work performed. It includes neither 
authorized pass-throughs for other direct costs nor the fee amounts paid by the City for 
subcontractors' invoices. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 







Performance 






Fixed Fee as 


Fee as 






Percentage of 


Percentage of 






Annual 


Annual 




Contract 


Contract 


Contract 


Maximum 


Year 


Billing 


Billing 


Total 


1 


8.0% 


0.0% 


8.0% 


2 


7.0% 


4.5% 


11.5% 


3 


6.0% 


5.5% 


11.5% 


4 


5.0% 


6.5% 


11.5% 



According to information provided by Mr. Quan. the 
maximum total annual fee for Contract Years 2 through 4 
appears to be at the low end of the range of fees payable to 
program management services contractors involved in other 
public 9ector capital improvement programs. 

According to Mr Wong, the fixed fee component would be 
paid by the City as invoices are submitted by the Contractor, 
while the performance fee component would be paid by the 
City semi-annually. In respi specific question raised 

by the Finance and Labor Committee about the PUCs 
processing of Contractor invoices. PUC staff advise that 
invoices would be submitted through the normal approval 
procedure of the PUCs project manager and the 1 
Contracts Administration Section for approval prior to 
review, approval, and payment by the Controller's Office. 

(d) Subcontractor Administrative Fee: The PUC would 
also pay an administrative fee to the Contractor's joint 
venture partners of 3 percent of subcontractors' direct 
salaries plus overhead costs. Mr Wong states that this 
administrative fee reimburses the Contractor for some of the 
administrative costs related to managing a number of 
Disadvantaged Business Enterprise subcontractors. In 
response to a specific question raised by the Finance and 
Labor Committee about determination of the subcontractor 
administrative fee level. PUC staff advise that the 3 percent 
rate was determined through negotiation between the PL'C 
and the Contractor and compares favorably to the lndustry 
BOARD OF SUPERVISORS 
BUDGET ANALYST 



14 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



average of 5 percent for such administrative fees. Five 
percent is the standard subcontractor administrative rate 
used in other City contracts, according to PUC staff. 

(e) Other Direct Charges: In response to a specific 
question raised by the Finance and Labor Committee about 
other direct charges, PUC staff advise that all other direct 
charges incurred by the Contractor would be approved in 
advance by the Manager of the UEB if they are in 
conformance with the Code of Federal Acquisition 
Regulations (the standard applied to City employee 
expenses), directly related to a project, and consistent with 
City policies. They would be reimbursed at cost as no mark- 
ups would be allowed. Such charges would be limited to out- 
of-town travel, messenger services, specialty printing, 
specialized software and hardware, and specialized services, 
materials, and equipment not provided by the PUC. Any 
equipment purchased through this contract would become 
the property of the PUC. 



Comments: Program Cost Savings 



1. UEB staff contend that the subject contract would secure 
program cost savings by means of economies of scale, 
program efficiencies, project acceleration, contract 
negotiation power, increased purchasing power, innovative 
technology, value engineering 9 , and controlled changes to the 
program's scope and schedule. UEB staff contend that 
relying on PUC employees to manage the capital 
improvement program would increase costs because it would 
lengthen the time taken to complete the program. 

Mr. Wong states that program management services 
contracts' ability to offset costs through savings have been 
demonstrated internationally. This argument was initially 
supported only by the anecdotal evidence contained in six 
highly summarized United States case studies which make 
up the small sample. The PUC staffs presentation to the 
PUC Commissioners of three positive examples was 



9 "Value engineering" is the independent overview of a facilities plan, its design criteria, and its 
conception at no more than 20 percent of design completion, to ascertain how well and cost 
effectively a plan addresses the engineering problem it is meant to solve. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



accompanied by the disclaimer that Meaningful 
measurement of cost savings is difficult ... because the 
benchmark is often not well defined, and most calculations 
are based on preliminary estimates of program costs made by 
the program management contractors themselves." 
Furthermore, the information presented was gathered 
verbally by PUC staff and is unsupported by audited written 
documentation. The second three examples represent a 
selection of public sector program management failures 
which neither fully evaluate the root causes of the cost 
overruns associated with those projects, nor explain how a 
program management consultant would address those 
problems. For example, the Budget Analyst notes that the 
cost of the Boston Central Artery Program has been 
significantly affected by project scope changes, 
environmental mitigation, and inflation, three factors which 
could be equally outside of the control of either public or 
private sector program managers. 

To provide further evidence of program cost savings, the PUC 
has subsequently solicited the following three letters from 
chtnts of the proposed contractors about the benefits of 
capital improvement program management services (the 
testimony was submitted at the July 19, 2000 Finance and 
Labor Committee meeting 

• The former Manager of the capital improvement program 
of the City of Portland. Oregon testified that Sverdrup 
Civil. Inc. saved that city $45,000,000, or 15 percent, of 
the first $300,000,000 of projects to eliminate sewer 
overflows into the Williamette River. 

• The former Executive Director of the Santa Clara County 
Traffic Authority testified that Bechtel Infrastructure 
Corporation saved $116,000,000, or approximately 9.7 
percent, of a $1,200,000,000 transit infrastructure capital 
improvements program, and took between four and 13 
years less than the schedule originally estimated by 
Caltrans. 

• The Managing Director of North West Water Limited in 
the United Kingdom testified that Bechtel Infrastructure 
Corporation's program management services saved 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

16 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



$485,000,000, or approximately 21.1 percent, of its 
$2,300,000,000 capital improvement program. 

2. The initial contract considered by the Finance and Labor 
Committee lacked performance measures which would 
permit the PUC to measure the program cost savings 
generated by the Contractor. In response to concerns 
expressed by the Finance and Labor Committee, the PUC 
and the Contractor have negotiated the performance 
measures and first year milestones contained in Attachment 
III. These performance measures and first year milestones 
form an Exhibit incorporated by specific reference in the 
proposed contract. At the end of the first contract year, the 
Contractor's performance against each performance measure 
and milestone would be assessed in terms of improvement 
relative to the UEB's current performance (the "baseline" 
measure). The Contractor's performance against the 
baseline would be used to determine the succeeding year's 
performance goals. The Budget Analyst considers that any 
audit of Contractor performance against contractual 
performance measures should also verify the validity and 
accuracy of the baseline measures. According to PUC staff, 
the PUC is confident that the baseline performance measures 
proposed for the performance measures contained in 
Attachment III would be found to be accurate and relevant 
under such independent auditor verification. 

PUC staff state that additional performance measures and 
milestones will be added in future years as the nature of the 
work changes. 

In addition to the annual PUC report to the Board of 
Supervisors on the Contractor's performance, PUC staff could 
facilitate Board of Supervisors program oversight and control 
by providing the following: 

• The Contractor's monthly written reports to the Public 
Utilities Commission. 

• The Contractor's quarterly presentations to the 
Commission. 

• The PUC and Controller's Office semi-annual audits of 
progress against performance measures. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



17 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



• The annual review by the Controller's Office of 
independent financial audits of each contractor 
participating in the San Francisco Water Alliance. 

3. PUC retention of overall program management 
responsibility appears to have the following advantages over 
sharing decision-making responsibility with, or delegating 
such responsibility to, a program management services 
contractor: 

• Program accountability. final decision-making, 
expenditure authorizations, and overall cost control 
responsibility reside appropriately with City employees. 

• PUC staff members' expertise in local water and sewer 
systems is maximized. 

• City employees are the most familiar with San Francisco's 
public sector administrative, appropriation, and policy 
development processes, and with the expenditure 
requirements of bond-funded programs. 

• An organizational focus on the capital improvement 
program will require the PUC to plan the future 
management of its infrastructure more strategically. 

Personnel Cost Savings 

1 PUC Btaff contend that the subject contract would secure 
considerable personnel cost savings for three reasons: 

(a) The PUC would not need to hire additional staff who 
would no longer be necessary once they had completed 
work related to the capital improvement program. PUC 
staff have not estimated the total amount of these alleged 
savings. However, given natural staff attrition over a 12 

ir program comprising approximately 200 diverse 
projects, the Budget Analyst questions whether the PUC 
would actually need to terminate any staff after 
completion of the capital improvement program. 

(b) The Contractor could respond more flexibly to changing 
staffing requirements and workload peaks. The Budget 
Analyst notes, however, that redeployment or addition of 
contractor staff is subject to prior PUC approval which 
raises the question of whether such redeployment or 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

18 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



addition of contractor staff would actually be faster than 
redeploying PUC staff, 
(c) Using contract staff would circumvent the difficulties in 
hiring new permanent staff (see Comments No. 6 and 7 
below). 

5. Mr. Phil Arnold of the PUC provided an informal 
comparison of UEB staff classifications at 1998-99 salary 
levels with the 1997-98 hourly billing rates for comparable 
staff employed by a selection of as-needed UEB contractors. 
Mr. Arnold states that this comparison indicates that the 
UEB pays more for low level staff, but less for high level 
staff. Therefore, using the Contractor's more junior staff for 
peak workloads would be cheaper than the UEB hiring 
equivalent staff. The Budget Analyst notes, however, that 
low level staff are likely to perform functions which could be 
competently performed by City employees. In situations 
where the UEB only requires specialist technical skills for 
short periods of time, UEB staff contend that the higher cost 
of contractor staff is offset by the costs imposed by the civil 
service hiring constraints described below. 

6. PUC staff emphasize the difficulty in hiring permanent 
City staff, citing the following reasons for hiring delays: 

(1) The lengthy process to fill even recently vacated 
positions for which there is budgetary provision. 

(2) Outdated civil service lists, union protests about list 
certifications, and the Department of Human Resources' 
reluctance to permit provisional hires before lists are 
completely exhausted. 

(3) The lack of certain specialist job classes in the Civil 
Service Commission's classification system which does 
not permit the PUC to request specific job skills within, 
for example, the construction management, architect, or 
engineer classes. 

7. As previously reported to the Finance and Labor 
Committee, the PUC takes between 33 and 68 weeks (or 
more) to hire a staff member into a budgeted position. Of 
this time, the Budget Analyst notes that between 21 and 29 
weeks is consumed by processing the filling of a vacancy 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



19 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



within the PUC. While the PUC needs to work closely with 
the other agencies involved in personnel hiring to expedite 
recruitment, the Budget Analyst strongly recommends that 
the PUC also streamline its own personnel hiring practices. 
In a letter dated February 10, 2000 to the Cabfornia State 
Auditor, the PUC General Manager wrote that the PUC 
personnel unit "wa> increased in 1998 by twelve positions (a 
growth of approximately thirty percent) to promote 
additional hiring." Despite these 12 new positions, and the 
three new personnel positions approved in the FY 2000-01 
budget (a 1204 Senior Personnel Clerk, a 1241 Personnel 
Analyst, and an 1817 Procedural Writer), the Budget Analyst 
notes that ongoing internal PUC personnel processing delays 
seem to continue. Such hiring delays have significantly 
contributed to the UEB salary underexpenditure of 
$11,702,490 for the first 11 months of FY 1999-00 10 . 

8. The Budget Analyst also notes that the PUC has not 
formulated a rigorous staffing projection beyond FY 2000- 
2001, even for the short-to-medium term, to staff City 
<>ns for the capital improvement program. The PUC 
has not determined: 

• The exact number of full-time equivalent staff the PUC 
would require if the PUC was to provide all the staff 
required for its capital improvement program. 

• Those staff members' job descriptions, job classifications, 
and their level of seniority within those job classifications. 

• The most appropriate employment conditions for each 
position (for example permanent civil service, limited 
tenure, or temporary positions, or personal services 
contracts). 

• When an existing classification could not provide the 
necessary engineering expertise. 

• When staff from other City departments which employ 
construction management services staff could be used 11 . 

• The impact of attrition rates on employee turnover within 
different job classifications. 



10 This underexpenditure figure includes both engineer and non-engineer salaries. 

11 Mr. Quan states that a review of DPW MUM. the Port, and the Airport undertaken in July and 
August of 1999 indicated that no such staff are currently available for PUC purposes. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

20 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



The Budget Analyst notes that the lack of a staffing 
projection led the California State Auditor to recommend 
that the PUC "develop a formal comprehensive plan to 
outline the staffing requirements necessary to complete its 
capital improvement plans." 

9. The San Francisco Water Alliance has proposed that it 
will need to employ 45 staff for the first year of the subject 
contract, as fisted in Attachment IV. According to Ms. Iwata, 
the PUC is currently seeking the Contractor's justification for 
this number of contract staff given that the PUC will need to 
find office space for them. Without a staffing plan, the 
Budget Analyst is unable to compare the relative costs and 
benefits of using City employees versus consultants for the 
capital improvement program. Furthermore, the Budget 
Analyst questions what staffing projection criteria the PUC 
will use to evaluate the Contractor's staffing requests. 

PUC Performance and Workload Issues 

10. During the three years between FY 1997-98 and FY 
1999-00, the PUC capital improvement program budget 
totaled $402,546,036 (see Attachment V, provided by Mr. 
Wong). However, during the same three year period, the 
PUC expended just $265,752,104, or approximately 66 
percent, of that capital improvement program budget (see 
Attachment VI, provided by Mr. Wong). 

The California State Auditor has expressed concern at the 
insufficient capital improvement program activity given the 
identified capital improvement needs. The California State 
Auditor identified the following causes for capital 
improvement program management problems at the PUC: 
the absence of an effective tracking system to monitor the 
progress of capital projects and the completion of preventive 
maintenance, much delayed cost and schedule estimates for 
all identified capital improvement projects, inefficient 
contracting procedures (see Comment No. 16 below), 
outdated project operations manuals and procedures, weak 
capital project and preventive maintenance monitoring, and 
inadequate formal project management training. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

21 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



11. As shown in Attachment VII, in the five years between 
FY 1995-96 and 1999-00, the number of filled UEB technical 
staff positions (denoted as "active engineers" in Attachment 
VII) has increased by approximately 188.7 percent, from 62 
to 117. These technical staff are responsible for San 
Francisco Water Department (SFWD) and Hetch Hetchy 
Water and Power (HHWP) capital improvement projects 
only. According to Mr. Wong, under the Memorandum of 
Understanding between DPW and the PUC which 
transferred the responsibility for the Clean Water Program 
(CWP) from DPW to the PUC, DPW engineers remain 
responsible for the technical aspects of CWP capital 
improvement projects which are funded by the PUC. 

12. In FY' 2000-01, if the FY 1999-00 total of 117 filled 
technical staff positions is maintained, the current 39 
technical staff vacancies are filled, and the 12 new technical 
staff positions approved for FY 2000-01 are also filled, then 
there will be 168 filled technical staff positions in the UEB. 
This represents an approximately 271 percent increase in 
technical staffing positions since FY 1995-96. The FY 2000- 
0] capital improvement program budget for SFWD and 
HHWP is $150,870,700. This represents an average 
budgeted capital improvement project workload for each of 
the 168 UEB technical staff in the amount of $898,040 in FY' 
2000-01. 

13. The Budget Analyst notes, however, that in terms of 
actual SFWD and HHWP capital improvement program 
expenditures between FY 1995-96 and FY' 1999-00, an 
average workload per filled UEB technical staff position of 
$898,040 would be approximately 40.5 percent higher than 
the previous high average workload of $639,140 in FY 1998- 
99. Mr Wong of the PUC argues that the PUC could not 
achieve a 40.5 percent productivity increase per staff 
member. The Budget Analyst notes that a number of factors 
suggest that the PUC should be able to absorb at least a 
significant portion of that 40.5 percent workload increase: 

• The PUC has invested in a number of initiatives to 
improve productivity, including the implementation of a 
new automated system to track preventive maintenance 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

22 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



requirements, the development of a formal management 
training program, and wider advertising of the continuing 
education opportunities for staff. 

• A considerable proportion of the new technical staff hired 
in FY 1999-00 were journey level or above. 

• New technical staff received enhanced training in FY 
1999-00. 

• Long-term UEB technical staffs experience and expertise 
should increase significantly each year. 

• The PUC's pool of technical expertise is growing with the 
planned increase from 117 to 168 technical staff in the 
UEB. 

The Budget Analyst notes that every 10 percent increase in 
productivity over FY 1998-99 levels for all 168 UEB technical 
staff would mean that $10,737,552 less work would need to 
be assigned to Contractor staff. 

14. In addition, the Budget Analyst notes that the UEB 
augments its staff capacity by (a) assigning SFWD and 
HHWP projects to DPW, and (b) hiring architecture and 
engineering consultants through competitive procurement. 
On August 15, 1997 the PUC signed a Memorandum of 
Understanding with the DPW for engineering work in excess 
of UEB's capacity. This Memorandum of Understanding 
gives DPW the first right of refusal on PUC engineering work 
which cannot be undertaken by PUC staff. 

15. According to Mr. Wong, the PUC is currently developing 
the latest update of its capital improvement program. As 
this planning process will not be complete until November of 
2000, the PUC is unable to advise the Budget Analyst as to 
the projected capital improvement program budgets for each 
of the next four years. Mr. Wong advises that the capital 
improvement program budgets for each of the next four years 
are expected to be at least comparable to those in FY 1999-00 
($189,644,430) and FY' 2000-01 ($178,870,700). However, it 
is not possible to calculate with any precision what the 
workload per UEB technical staff member over the four years 
of the subject contract will be. Given this, and the absence of 
a staffing plan (as noted in Comments No. 8 and 9 above), 
the Budget Analyst questions the PUC's ability to accurately 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



23 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



quantify the workload impact of the PUC's capital 
improvement program on UEB staff and, therefore, the 
PUC's need for contractor staff to help with workload peaks. 

Use of a Single Contractor 

16. The IFPTE expressed concern that too many services 
are being bundled into the subject contract which potentially 
(a) deters termination of the contract in the event of 
performance failure, (h) allows the Contractor to assign work 
to itself or its subcontractors, and (c) provides a disincentive 
for the Contractor to provide accurate performance 
information to the PUC. In response. Mr. Wong advises that 
these concerns have been addressed by the negotiated 
contract in terms <>f (a) the termination of convenience 
clause, (h) City staff members' responsibility for final 
decisions, and (c) the requirement for regular monthly 
reports, semi-annual reviews, and annual audits. 
Furthermore, Mr. Worm advises that the PUC 
Commissioners prefer one contract in order to: 

• iVntralize responsibility and accountability. By 
channeling the work through one prime Contractor, the 
PUC contend- that it (a) makes the Contractor fully 
responsible for its output and the output of it- 
subcontractors, (b) reduces the PUCs liability by having 
only one point of contact, and (c) reduces the 
subcontractors' liability because the prime Contractor 
carries the bulk of their liability. 

• Maintain integration of program management and 
construction because (a) the profit for the Contractor 
comes from savings achieved (as explained in the section 
on "Proposed Contractor Fees" above), not from the 
program management services, (b) the Commissioners 
want a Contractor with specific utility business expertise 
who cares equally about program management and 
construction, and (c) integration supports the goal of 
centralized responsibility and accountability discussed 
above. 

• Avoid multiple, expensive, and lengthy contractor 
selection processes. PUC staff contend that it is cheaper 
and quicker to have just one contract. With regard to 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



24 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



cost, the PUC advises that the average cost of a contractor 
selection process is $150,000. With regard to length of 
time, a May of 1997 PUC consultant's report stated that it 
took six to 12 months for the PUC to complete a single 
contracting process, from development of the RFP to the 
award of the contract. This was twice as long as the DPW 
contracting process, according to the consultant. Since 
1997, the PUC has revised its financial reporting and 
auditing standards, clarified its expectations and 
approval process for professional service contracts, and 
increased and centralized its contracting staff. The 
Budget Analyst would therefore assume that the PUC 
should now handle multiple contracts efficiently and cost 
effectively. 

Role of Each Joint Venture Partner and 
Subcontractor 

17. In response to the Budget Analyst's prior report on this 
proposed contract. Attachment VIII, provided by the San 
Francisco Water Alliance and the PUC, contains an 
organization chart which illustrates how lead Contractor 
staff from each of the joint venture and subcontractor 
organizations would be integrated into the PUC's capital 
improvement program staffing. Additional as-needed 
Contractor staff would be provided to meet peak workload 
demands. Attachment IV lists the 45 key Contractor staff 
who would be dedicated to the contract. 

18. As previously noted, during its July 19, 2000 
consideration of the first version of the subject contract, the 
Finance and Labor Committee raised a number of specific 
questions. Attachment IX contains the PUC's written 
responses to 13 questions posed by the Finance and Labor 
Committee. The PUC has not responded in writing to a 
further request that consideration be given to a Phase I and 
Phase II contract. Instead, the PUC has proposed amended 
contract language to provide for annual Board of Supervisors 
review of the Contractor's performance, as described in this 
report. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

25 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

With regard to a request for more information about the 
Public Utilities Commission's selection of the proposed 
Contractor, PUC staff advise that the Vice-President of the 
Public Utilities Commission will be present at the Finance 
and Labor Committees Augusl 2. 2000 meeting to respond 
directly to the Committee. 

Summary: Pursuant to Motion No. M99-38. approved by the Board of 

Supervisors on April 12, 1999, the Budget Analyst was 
directed to review the subject contract in terms of the 
following three-part question. Would the subject contrat ' 
increase or decrease costs, (b) increase or decrease the 
oversight of expenditures, and (c) provide any other benefits 
or costs when compared to managing the PUC's capital 
improvement program with existing and/or new City staff? 

With regard to the first part of the question as to whether the 
subject contract would increase or decrease costs, the PUC 
has provided the Budget Analyst with (a) limited substantive 
data, in the form of letters from clients of the proposed 
contractors, to prove the subject contract would decrease 
program costs, and (b) no data to prove that the subject 
contract would decrease personnel costs. The absence of a 
rigorous staffing projection beyond FY 2000-2001 to staff 
City positions for the capital improvement program means 
that the Budget Analyst is unable to compare the 
Contractor's proposed cost of approximately $109 per hour 
for 412, 135 hours over four years with comparable cost and 
time information from the PUC. Furthermore, in relation to 
personnel costs, the Budget Analyst notes that the delay in 
staff hiring, which is one of the problems which the subject 
contract is designed to address, is significantly affected by 
internal PUC processes. 

However, the subject contract, as amended by PUC staff, 
does contain eight initial key performance measures'' which 
are intended to enable the PL'C and the Board of Supervisors 
to determine whether the subject contract had indeed 
decreased program cos 

With regard to the second part of the question as to whether 
the subject contract would increase or decrease expenditure 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

26 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

oversight, the Budget Analyst considers that the proposed 
contract would maintain, or even increase, oversight over 
expenditure, if the PUC meets its obligation, under the terms 
of the contract, to (a) specify precisely what work it would 
require the Contractor to perform and at what cost, and then 
to (b) monitor whether or not the Contractor had met those 
performance requirements. The Budget Analyst notes, 
however, that such increased oversight would also be possible 
if the PUC more tightly specified and measured the 
performance of its own staff, holding them accountable for the 
delivery of pre-determined outcomes. Mr. Wong advises that 
the PUC is enhancing the performance measurement 
capabilities of its staff to ensure improved expenditure 
oversight. In particular, the PUC is increasing its training 
emphasis on timely delivery of projects against scheduled 
milestones, and is increasing its management control of 
technical staff, according to Mr. Wong. 

With regard to the third part of the question as to whether the 
subject contract would provide any other benefits or costs 
when compared to managing the PUC's capital improvement 
program with existing and/or new City staff, the Budget 
Analyst reiterates that the PUC has provided insufficient data 
on which to make such an assessment. 

Recommendations: 1. While the subject amended contract's performance 
measures are intended to provide measurement of the savings 
expected to result from hiring the Contractor, the PUC has not 
demonstrated how it would be more cost effective to enter into 
the subject contract than to have City employees fully 
responsible for program management. As this substantive 
question remains unanswered, the Budget Analyst considers 
approval of the subject program management services contract 
to be a policy matter for the Board of Supervisors. 

2. As previously noted, the Public Utilities Commission has 
not yet approved the amended version of the proposed contract 
which includes performance measures and provides for annual 
Board of Supervisors approval for continuation of the contract. 
Therefore, continue the subject resolution pending formal 
Public Utilities Commission approval of the amended Program 
Management Services contract. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

27 



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sfpuc capital improvement program management services 
request for proposals 
Evaluation Score Sheet 



Attachrrgrit II 
Page 1 or 3 



Name of Firm: 



Revieaer. 



Date: 



NOTE: The descriptions hsted under each criteria establish the basis for a score of Good 
CRTTERLA VHGHT SCORE 

1. Program Management Approach 



25 

l norcugh, strong & responsive program approach 
to meet changing SFPUC needs for services & expertise. 
Well developed, thorough, resoonsive & considered 
1 st year & 4 year program imolemenration plans. 
1 norcugh, strong & specific aoproach to expediie program 
& project implementation, achieve significant cost & time savings. 
Strong, clear & precise definition of success for SFPUC program 
results & client satisfaction. 

Strong, detailed approach & recommendation of program 
management systems & tools for control & reporting 
Thorough, strong & specific aporoach to specialized technical 
services for peak SFPUC workload. 

Strong, specific approach to specialized construcaon management 
services, reviews, partnering dispute resolution & Aims avoidance. 
Thorough, strong & effective aooroach to the SFPUC Program 
m Diversity, community outreach & goals for inclusion of minoriues & women. 
Strong, innovative & specific approach to full utilization and development of 
UE3 Sc DPW staff, strong aoproach to Staff Development Program & technology transfer 



2. Capability of PMC Management Team Members 



25 



Program Manager has 15 years experience and strong technical 

background in field of expertise. 

Program Manager has 5 years strong experience as responsible program 

manager on similar water and/or wastewater programs of SI billion or more. 

Program Manager & approoriate PMC management team members hold 

current California PE licenses. 

Strong, demonstrated record of success of Program Manager for PMC prime 

consultant on other similar, cornclex & challenging programs as SFPUC 

Other team members have S years strong experience in field of expertise. 

Other team members have 5 years strong excenence in similar management 

positions on significant, comolex Cx important public works programs as SFPUC. 

Strong management experience to high standards, top quality 

pertormance, cost savings & full client satisfaction 

Strong cornmitment to oromcting diversity & record of 

success managing diverse workforce. 

Proven record of flexible, resoonsr/e & creative problem 

solving on complex, imcortant & challenging programs. 

Sigr.incr.nt contribution to overall orcgram success, accompiishmer.t 

or cient objectives on time & within budget. 

Strong experience and skill in streamlined program management 2c 

implementation under public government processes and procedures. 

Lnicue knowledge, experience and qualifications to perform 

roles and responsibilities in SFPUC program. 



Outstanding (9) 
Superior (7) 
Good (5) 
Fair (3) 
Poor (1) 



Outstanding (9) 
Superior (7) 
Good (5) 
Fair (3) 
Poor (1) 



Page 2 of 3 
SFPUC CAPITAL IMPROVEMENT PROGRAM MANAGEMENT SERVICES 
REQUEST FOR PROPOSALS 
Evaluation Score Sheet 



Name of Firm: Rezirxcr. 

3 . Minimum Qualifications for PMC Team 



Daze: 



Annual prime or collective JV corporate revenues Q - Yo 

of S ICC million or more. 

Sufficient capaburty of prime and JV partners to secure appropnate 3 Yes Q \'o 

insurance coverage. 



-\ OTE: The descriptions listed under each criteria establish the basts for a score or Good 
CPJTERL\ HEIGHT SCORE 

4. CAPABILITY OF FIRMS ON PMC TEAM 25 



ars strong pnme or collective JV' program management Q Outstanding (9) 

experience on similar public works programs of S 1 billion or more. 2 Suverior (7) 

15 years significant experience within team on water 3c wastewater c Good (5) 

systems, operations & engineering (Prefer Prime or JV experience;, c Fair (3) 

5 years strong management experience of prime or JV' partners □ Poor (1) 

on significant, complex & imoortant public works programs as SFPUC 
Substantial corporate strength, reliability, fcn^nr^l technical & managerial 
capability of prime or JV partners to assume prune nsks & nesponsTDuies. 
Strong expertise, depth of experience, strength Sc capability in 
similar management and/ or technical services as proposed. 
Strong prime or JV response to program challenges ic difScumes. demonstra ted 
ability to adapt, recover & achieve high quality results regardless of issues. 
Strong depth and breadth in current staff levels to meet 
SFPUC needs for flexible expert services. 

High quality program results, proven success, cost Sc rune savings, 
and high client satisfaction with services similar to proposed. 
Strong knowledge & understanding of California water 
issues, regulations & stakeholder concerns. 
Strong record of firm's commitment to include 
minority- & women-owned businesses on oroject r.T.iT"; 
Significant exoerience with orcgrams ^rni'ar ro SF?L C 
Program in Diversity. 

Strong experience with client staff development 2c training, 
technology & management svstems transrer to clients. 
Demonstrated success with design/ Duiiti projects, constr-icoon 
sire-- programs, partnering Zc construction cost control measures. 
o.ererences provided as recuesteri. 



Attachment II 



Page 3 or 

SFPUC CAPITAL IMPROVEMENT PROGRAM MANAGEMENT SERVICES 
REQUEST FOR PROPOSALS 
Evaluation Score Sheet 



Name of Firm: 



Reviewer. 



Daze: 



NOTE: Tne descriptions Hsted under each criteria establish die basis for a score of Good. 
CRITERIA VEIGKT SCORE 



5. approach to SFPUC Program in Diversity 



15 



Strong, clear commitment to mrrnrnrrp program opportumties 
for MBE/WBE firms, especially those new to the SFPUC 
Significant uriiizaicn of MBE/WBE firms in important 
program management and technical roles. 
"Creative approaches to SFPUC Program in Diversity, to promote 
mciusicn of minorities & -women in program 
Scrong, dear & specific plan to promote MBE/WBE 
growth 2c business development, transfer technology & skills. 
Tnorough, strong & specific plan for job readiness training, 
pre-aDcrendceshio and paraorofessional inte rn s hip training programs, 
innovadve, aggressive programs & acrivices to enhance enectrveness 
of SFPUC Program in Diversity. 

6. Understanding of SFPUC Program io 

Strong &C thorough understanding of capital improvement 

program goals & California water issues. 

Strong, clear understanding of unique program approaca, 

financing <3c ann ual imolementancn plan. 

Scrong grasp & understanding of water, power 

& wastewater ooeranons, facilides and capital projects. 

Strong understanding & response to stakeholder concerns 

2c public accountability. 

Tnorough, clear understanding of program rrnarr -al issues. 

Strong understanding of local labor union issues, community values 

and employee stake in program. 

Gear understanding of program constraints and comingences. 

Strong, thorough responsiveness to Request for Proposals. 



Outstanding (9) 
Superior (7) 
Good (5) 
Fair (3) 
Poor (1) 





- - - 


D 


Outstanding (9) 


Q 


Suoerior (7) 





Good (5) 


a 


Fair (3) 


a 


Poor (1) 



GRAND TOTAL SCORE 



ICO 



Tee SFPUC/KRC Contract Compliance Officer wiR assess compliance with Nondiscrimiitaam and MBE/WBE 
Utilization requirements. Failure to compbyvnR result in disqualification from further consideration. 

NOTE: Scores are calculated by muhipbying the value for the qualitative score by the vxight (for example, a 
qualitative score of Superior for No. i Pro9ram M anaiement Approach is 7x25, or 175). 



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SFWA STAFFING - FTE / Year 


SFWA Core Team (per SFWA Proposal) 

Sandy Lawson (Engineering Manager) 

Secretary 

PC Engineer 

Estimator (Dennise Durkin) 

PMS / Cost Engineer 


4 


Cost Schedule Engineer 




F&A / Cost engineer 




Area PC Engineer / Trend Engineer 




PCM Contract / Procurement Manager 
Outreach / Diversity Person 




Project Manager 
Project Engineer 

S/T Bechtel 

Sverdrup (Peterson, Construction Management) 
Sverdrup (Construction Management) 

S/T Sverdrup 

Jefferson: Diversity Specialist / Outreach 
Senior Estimator / Trend Engineer 




20 








DBA / Systems Engineer 
Project Controls Engineer 




Procurement Manager 




EDMS Engineer 




Field Cost Engineer 




Contracts Administrator 




Technical Specialist 




S/T Jefferson 


10 


RMC Randy Raines (Planning and Design) 






Planning Specialist 

S/T RMC 

Olivia Chen: Mechanical Engineer Optioneering 










Olivia Chen: Civil Engineer Specialist 




Olivia Chen: Planning Engineer / 4 Year Plan (T. Hodges) 

S/T OC Consultants 

Roja: Asset Condition Support 




4 




1 


Roja Add'l Support (Optioneering / Value Engineering) 

S/T GRA 

Carollo: Construction Support 


0.9 


2 


1 


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S/T Carollo 

CPM: Sr Planning and Scheduling Engineer 
CPM: Planner 


1 


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1 


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S/T CPM 


1 


3 


TOTAL SFWA 


45 



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Attachment IX 
Page 1 ot k 



QUESTIONS FROM THE 7/19/00 FINANCE AND LABOR COMMITTEE 
MEETING ON PROGRAM MANAGEMENT AND SFPUC RESPONSES 

1 . SFPUC to provide a) specific performance measures, objectives, work 
plan and budget for the first 12 months of proposed contract, and b) 
advice on how longer term performance measures and objectives will 
be determined. 

a) Performance measures and first year milestones are identified 
in Attachment 1*(Key Performance Measures for CIP) and 
include Project Design Completion, Construction Completion, 
Attainment of HRC Goals, Close-out of Construction Projects 
within Six Months, Accuracy of Engineer's Estimate, CIP 
Expenditure Progress. Short-term milestones include 
Completion of First Draft of CIP within 3.5 months; Completing 
Assessments and Providing Recommendations of UEB 
Organization, Project Controls, Project Plan Procedures; 
Complete Training Curriculum for Project Managers, Project 
Engineers, Contract Administration, Small Businesses, Safety. 

b) Some long term performance measures and objectives are 
spelled out in the Key Performance Measures, while other 
targets will be added in future years as the nature of the work 
changes. Each performance measure will be assessed each 
year to set succeeding year's goals. Measurements are 
compared to the current UEB baseline performance, with many 
Year One goals targeted at 25% improvement over baseline, 
followed by tentative goals of an additional 10% for Year 2, 
another 10% for Year 3, and another 5% for Year 4. 

2. SFPUC to provide options for yearly Board of Supervisors oversight: 

The Board can participate in any or all of the following progress reporting tool 
that the SFPUC will use to obtain oversight and control of the program 
management effort 

• Monthly written reports will be provided by the SFWA to the 
Commission. 

• Quarterly presentations will be made to the Commission 

• Semi-annual performance audits of SFWA by SFPUC and the 
Controller's Office will be conducted to assess progress on the 
performance measures. 

• The Controller's Office will review the independent financial audits of 
the prime and each sub-consultant annually. 

All of these reports can be shared with the BOS and Budget Analyst. 



: Refer to Attachment III of this report, 



Attachment L 
Pape 2 of 4 



Program Management funding will be a line item in the annual Capital 
Improvement Plan submitted to the Commission and the BOS. which will 
require approval Additionally, the BOS will be presented an annual report on 
the Consultant's performance. Based on the annual performance reports, the 
BOS shall have the right to disapprove the annual continuation of the 
contract. 

3. What are the estimated cost savings during the 10-15 year program'? 

The SFWA / SFPUC have set a goal of saving 1 0% of the cost of the Capital 
Improvement Program (CIP) identified in the Program Management 
Consultants Request for Proposal (RFP) dated July 1999 That amounts to 
about $138 million (10% of $1 38 billion) in savings during the first 4 years of 
the program. The $1.38 billion estimate in the RFP is a planning estimate 
developed by the staff of the SFPUC and is based on 1998 dollars 

Currently there are only $500 million in funds available for the program. If no 
future funds are approved, the contract with the SFWA will be terminated 
However, the 10% savings on the total cost of the CIP, remains as a goal, 
although the total value of the savings will be adjusted to reflect the overall 
value of the CIP that is influenced by the SFPUC 

Training of the SFPUC staff by the SFWA will ensure that the program 
savings continue even after the SFWA contract is completed. 

4. Why would SFPUC contract out identification of new financing sources 
if this duplicates work done by existing SFPUC staff 7 

Although the Program Management RFP requested proposers to offer this 
capacity, there is currently no task for identifying financing sources in the 
proposed contract. The SFPUC's Assistant General Manager for Finance & 
Administration has almost 20 years of financing experience, and the 
organization has issued an RFP for financial advisory services. In addition, 
the Finance Bureau staff is being reorganized, with additional capacity being 
added in the areas of financial planning and debt administration. 
Identification of alternative funding sources requires discussions with many 
parties, including the Program Management Consultant, but the work will be 
done by staff. 

5. Why is the SFPUC planning to contract out development of a public 
information program that would duplicate the work of the SFPUC's 
Public Information Office? 

Existing SFPUC staff will provide the bulk of the Public Information Program 
effort. The SFWA will support a significant capital improvement program that 
will involve extensive work in more than four Bay Area counties - San 



Attachment IX 
Page 3 of 4 



Francisco, Alameda, San Mateo and Santa Clara, and beyond. SFPUC 
facilities stretch from Yosemite National Park to the Bay Area, and into San 
Francisco. This huge endeavor calls upon expansion in every area of the 
SFPUC, including public affairs activities. Planning and construction will 
occur in the various counties, traversing over 150 miles. Public meetings, 
community outreach, public notification, informational materials and media 
relations will increase dramatically as projects move toward design and 
construction. When special skills or staff augmentation is indicated, support 
services will be provided to the current SFPUC communications staff on an 
as-needed basis. 

6. How were MBE/WBE goals determined? Are they based on state or 
local requirements? 

The goals were established in conformance with CCSF regulations, practices 
and procedures. The SFPUC unilaterally imposed additional 2% MBE and 
1% WBE goals for each of Years 2, 3 and 4. 

7. Can the City terminate the contract at any time? 

According to the contract, the City has the option, in its sole discretion, to 
terminate the agreement at any time during the term, for convenience and 
without cause. The City shall exercise this option by giving SFWA written 
notice of termination. The notice shall specify the date on which termination 
shall become effective, and invoices should be received for fees earned 
within 30 days from specified termination date. 

8. Does the Contractor carry all the liability for its subcontractors? 
Under the contract with the SFPUC, the SFWA, Joint Venture, has full liability. 

9. SFPUC to break down the upper maximum Contractor remuneration of 
$45 million by the five remuneration categories. 

SFWA has provided a nominal breakdown based on information provide in 
the RFP - see Attachment 2* The breakdown may change depending on 
funding availability, and CIP projects. 

10. Would Contractor invoices be directly submitted to the City, or would 
they first be verted by the SFPUC? 

Invoices would be submitted through the normal procedure of approval 
through the Project Manager, and then processed through Contracts 
Administration for payment. 



-'-'Refer to Attachment I of this report. 



Attachment I> 
Pape k oi h 



1 1 . How was the 3 percent subcontractor administrative fee level set 9 
What is the industry standard? 

This figure was arrived at through negotiation and is lower than the usual 5% 
applied on other City contracts and within the industry. 

12. What are the criteria used to determine acceptance of "other direct 
charges"? 

Other direct charges can only be applied if they are in conformance with the 
Federal Acquisition Regulations (FAR), which is the same standard applied to 
City employee expenses All charges must be directly related to a project, 
must be pre-approved, and will be consistent with City policies SFWA will be 
reimbursed at cost for ODCs; no mark-ups are allowed 

13. What are the respective roles and responsibilities of each SFWA 
company? 

Attachment 3*is an organization chart that shows how the SFWA is integrated 
into the SFPUC's Program Management effort As previously discussed, the 
SFWA team will primarily provide special skills and tools related to managing 
a capital program of this size. In addition, they will provide as-needed staffing 
to meet peak demands for such things as construction management. The 
bulk of the program management activities will be provided by the 
SFPUC/City staff buttressed by the SFWA's management tools and expertise 
Attachment 4*is a staffing plan for the SFWA based upon the baseline 
information in the RFP. 



-Refer to Attachment VIII of this report. 
-Refer to Attachment IV of this report. 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

Item 2 - File 00-0852 

Note : This proposed ordinance was continued by the Finance and Labor Committee 
at its meeting of July 19, 2000 (see Comment 5). 



Department: 
Item: 



Library 

Ordinance (a) approving a Memorandum of Understanding 
(MOU), dated as of July 1, 1999, between the San Francisco 
Public Library and the Friends and Foundation of the San 
Francisco Public Library ("Friends and Foundation") for 
use of space in the Main Library building for the 
performance of Library-related services, generation of 
revenues for Library Department purposes, and assurance 
of private funds to provide support on an ongoing basis for 
the San Francisco Public Library system; and (b) amending 
Article XIII, Chapter 10, Part One of the San Francisco 
Municipal Code ("Administrative Code") by adding section 
10.116-6 thereto, authorizing the City Librarian, or his or 
her designee, to accept and expend any individual gifts 
from the Friends and Foundation of a value of $25,000 or 
less; and (c) authorizing and approving certain agreements 
to be made between the City and the Friends and 
Foundation as contemplated by such MOU, including a 
lease of office and gift store space and an agreement giving 
the Friends and Foundation the right to manage the 
meeting rooms, auditorium, and other space for private 
functions and special events and to charge fees for such 



Description: 



The proposed ordinance would approve (a) a Memorandum 
of Understanding (MOU) between the City and the Friends 
and Foundation of the San Francisco Public Library, which 
would include the lease of Library space to be used for 
Friends and Foundation office space and a gift shop, (b) a 
Marketing and Events Management Agreement between 
the City and the Friends and Foundation, which is Section 
3 of the subject MOU, for marketing and events 
management of space for private functions and events, and 
(c) an amendment to the Administrative Code to authorize 
the City Librarian to accept and expend any individual gifts 
from the Friends and Foundation of $25,000 or less without 
receiving Board of Supervisors approval. 

The proposed MOU would be effective retroactively to July 
1, 1999, and would expire on June 30, 2005, a six-year 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

43 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



period. 1 Under the proposed MOU, the Friends and 
Foundation would provide a minimum of $200,000 per year 
of private funding to the Library for library-related 
projects. The Library would permit the Friends and 
Foundation to use approximately 2,686 square feet for 
office space, and approximately 300 square feet for a gift 
store. In exchange, the Friends and Foundation would pay 
rent of $1 per year rent for the office space and $1 per year 
rent for the gift store space. 

The proposed Marketing and Events Management 
Agreement, which is described in Section 3 of the subject 
MOU, would be ratified retroactively for the period from 
■July 1. 1!)99 through June 30, 2000. For the one-year period 
from July 1 1999 through June 30, 2000, the Library 
provided space in the Main Library for private functions 
.uid non-City events According to Mr. George Nichols of the 
Library, the Library determined fees for special events, and 
received approximately $50,600 in revenue generated by 
those fees in FY 1999-00. $60,000 was included in the FY 
1999-00 Library budget to pay the Friends and Foundation 
an annual events management fee. which is $9,400 more 
than the $50,600 in revenues generated. According to Mr 
Nichols, the consultant hired by the Library to study the 
Marketing and Events Management Program 
recommended to the Library Commission that the Program 
not be continued as it was currently structured. Although 
the proposed MOU provides that the Friends and 
Foundation has the option to extend the subject Agreement 
for a period of up to one year to June 30, 2001, subject to 
City approval and appropriation of funds by the Board of 
Supervisors, Mr. Nichols states that the Friends and 
Foundation did not exercise that option with the period 
required by the MOU. As a result, the Agreement 
terminated as of June 30, 2000. 

The proposed amendment to the Administrative Code 
would authorize the City Librarian to accept and expend 
individual gifts of cash, goods or services, valued at $25,000 
or less, from the Friends and Foundation without prior 
approval from the Board of Supervisors. Under the 



1 According to Mr. George Nichols of the Library, the proposed MOU is retroactive because of an 
extended negotiating process with Friends and Foundation, which had recently merged into one 
organization, as noted in Comment No. 1. and because of administrative del : 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

44 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

proposed amendment, the City Librarian would submit an 
annual written report to the Controller and the Clerk of the 
Board of Supervisors listing the gifts accepted from the 
Friends and Foundation and summarizing how the City 
Librarian expended such gifts. 

Comments: 1. According to Mr. Nichols, the Friends and Foundation of 

the San Francisco Public Library is a volunteer 
organization governed by a Board of 30 volunteer members, 
dedicated to fundraising to support the Library. The 
Friends and Foundation, a nonprofit organization, was 
formed out of the July 1, 1999 merger of two organizations 
formerly known as the Friends of the San Francisco Public 
Library ("Friends") and the Library Foundation of San 
Francisco ("Foundation"). The Friends was a nonprofit 
organization founded in 1961 and dedicated to raising 
funds for Library programs. The Foundation was a 
nonprofit organization founded in 1991 to raise private 
funds to pay for Library furnishings, fixtures, and project 
support. The Friends have been operating under an MOU 
with the City and County of San Francisco dated February 
23, 1996, in which it has been providing the Library with 
supplemental funding for particular library projects. The 
Foundation had been operating under an MOU with the 
City and County of San Francisco, dated May 2, 1996, 
which terminated on June 30, 1999, the date the 
Foundation ceased to exist. The Foundation had also been 
operating under an events management agreement, dated 
September 30, 1996, in which the Foundation provided 
services for the marketing and management of the event 
space in the Main Library for meetings, lectures, 
receptions, and other private events after the Library's 
public hours. Although the events management agreement 
with the Foundation expired on June 30, 1999, the 
Foundation continued to provide special event management 
services to the Library in FY 1999-2000. 

2. The proposed MOU, including the Marketing and Events 
Management Agreement, would cover the merged 
organization, Friends and Foundation of the San Francisco 
Public Library, and would be effective retroactively to the 
date of the merger, July 1, 1999. The proposed MOU, except 
for the Events Management Agreement, would be effective 
through June 30. 2005 and could be extended on a year-to- 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

AS 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



year basis after June 30, 2005. The Marketing and Events 
Management Agreement, which is Section 3 of the subject 
MOU, would be effective retroactively to July 1, 1999 
through June 30, 2000. Under the terms of the MOU, the 
Friends and Foundation had the option to extend the 
Marketing and Events Management Agreement for a period 
of up to one year from July 1. 2000 through June 30, 2001 
by giving written notice to the City after June 1, 2000 and 
before June 30, 2000. Under the terms of the MOU, such 
extension would be subject to the approval of the City 
Librarian and the appropriation of funds by the Board of 
Supervisors According to Ms. Adine Varah of the City 
Attorney's Office, because the Friends and Foundation did 
not exercise their option to extend the Marketing and 
Events Management Agreement during the time period 
specified in the MOU, the Agreement terminated on June 
30, 2000 and will not be renewed. 

3. Under the proposed MOU. the Friends and Foundation 
would provide the City a minimum of S200.000 per year in 
private funding. The Library would provide to the Friends 
and Foundation 2,686 square feet of office space for SI 
annual rent and 300 square feet of gift shop space Cbi 
annual rent. The Library would provide basic building 
utilities and services, including electricity, heating, 
ventilation, air conditioning, and janitorial services, at its 
costs. According to the MOU, under no event would the 
$200,000 in annual private funding be less than the fair 
market value of the office and gift shop space, totaling 
2,986 square feet (2.686 plus 300). According to Ms. 
Claudine Venegas of the Department of Real Estate, 
commercial rental space in the Civic Center ranges from 
$32 to $36 per square foot annually Therefore, fair 
market value for the subject office space would range from 
$95,552 annually (2.986 square feet time $32 per square 
foot) to $107,496 annually (2.986 square feet time $36 per 
square foot). 

4. Attachment I is a memorandum provided by Ms. Susan 
Hildreth. Acting City Librarian, in response to concerns 
expressed in the July 19. 2000 Finance and Labor 
Committee meeting. These concerns include (a) the use of 
Library space to provide office space for the Friends and 
Foundation: (b) the required minimum contribution level 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



from Friends and Foundation to the Library of $200,000; (c) 
Library oversight of Friends and Foundation; and (d) the 
Friends and Foundations duty to comply with applicable 
sections of the Charter and Administrative Code, including 
the Sunshine Ordinance. Additionally, the memorandum 
addresses concerns raised by SEIU, Local 790, in a letter to 
the Finance and Labor Committee, regarding the Friends 
and Foundation use of Library patron lists for solicitation 
mailings, and the authority of the City Librarian to refuse 
pledges or gifts that are not consistent with the Library's 
goals. 

5. The proposed ordinance would amend the Administrative 
Code to authorize the City Librarian to accept and expend 
funds of $25,000 or less from the Friends and Foundation 
without Board of Supervisors approval. The proposed 
amendment would require that the City Librarian submit a 
written report to the Controller and the Clerk of the Board 
of Supervisors annually listing the gifts accepted from the 
Friends and Foundation and summarizing how such funds 
were expended. Currently, Board of Supervisors approval 
is required to accept and expend gifts greater than $5,000. 
According to Mr. Nichols, the Library has submitted 4 such 
resolutions to the Board of Supervisors in FY 1999-00. As 
stated in the attached memorandum (Attachment II) 
provided by the Library, the Library would benefit from the 
proposed amendment to the Administrative Code, because 
the amendment would "facilitate timely implementation of 
activities funded through gift funds received from the 
Friends and Foundation, (and) reduce the Library's 
administrative processing of various small gifts provided by 
the Friends and Foundation without compromising the 
need for public disclosure of funds received and spent". The 
Budget Analyst considers approval of the proposed 
amendment to the Administrative Code to be a policy 
matter for the Board of Supervisors because it would 
authorize the City Librarian to accept and expend gifts up 
to $25,000 from the Friends and Foundation without prior 
Board of Supervisors approval. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

6. In summary, the Budget Analyst recommends approval 
of the proposed MOU between the City and the Friends and 
Foundation which would provide the Library a minimum of 
$200,000 per year in private funding in exchange for gift 
shop and office space for the Friends and Foundation. 
According to the MOU, under no event would the $200,000 
in annual private funding be less than the fair market 
value of the office and gift shop space. Additionally, the 
Marketing and Special Events Agreement, included in 
Section 3 of the proposed MOU, was terminated on June 30, 
2000, and will not be renewed. The Budget Analyst 
considers approval of the proposed amendment to the 
Administrative Code to be a policy matter for the Board of 
Supervisors because it would authorize the City Librarian 
to accept and expend gifts from the Friends and Foundation 
of $25,000 or less without prior Board of Supervisors 
approval. 

Recommendation: Approval of the proposed ordinance is a policy matter for 
the Board of Supervisors, as noted in Comment No. 5. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

48 



ou-i-27-oo 08:42 Attachment I 



Page 1 of 3 



San Francisco Public Library 

100 Larkin Street. San Francisco. CA 94102 



Memorandum 

To: Severin Campbell, Budget Analyst's Office 

From: Susan Hildreth, Acting City Librarian^ n 

Re: Issues regarding MOU between the San Francisco Public Library and Friends and 
Foundation of the San Francisco Public Library 

Date: July 27, 2000 

Several issues were raised at the July 19 th , 2000, Finance Committee regarding the MOU 
between the San Francisco Public Library and the Friends and Foundation of the San 
Francisco Public Library. The primary issues of concern are as follows: use of space by 
the Friends and Foundation in the Main Library, required contribution by the Friends and 
Foundation, lack of control by the Library Commission over the activities of the Friends 
and Foundation and lack of disclosure regarding Friends and Foundation activities. 

Use of space by the Friends and Foundation in the Main Library: The Friends of the 
Library had office space in the old Main Library for many years. When the New Main 
Library was opened, space was made available for both the Friends and the Foundation in 
separate locations in the building. We are in the process of consolidating the space used 
by the Friends and Foundation into one location so that the merged organization can 
effectively function in one unified space. 

Although space is at a premium in the Main Library, the Friends and Foundation will 
occupy only 2,686 square feet of office space in a 375,000 square foot building. The 
space the Friends and Foundation will occupy on the 6 floor is not space that has been 
constructed to support the weight load of books, so the space could only be utilized for 
other office uses. The rental arrangement as proposed in the MOU does provide space to 
the Friends and Foundation at minimal cost, but those dollars that otherwise would be 
spent on rental of office space are dollars that can be contributed to the Library. Also, the 
proximity of Library Administration and the Friends and Foundation allows for close 
cooperation and interaction of these two organizations which is essential for successful 
collaboration. 



?ui-27-oo oa:42 Attachment I 

Page 2 of 3 



Required contribution by the Friends and Foundation: The minimum level of 
contribution required by the Library from the Friends and Foundation is S200,000 
annually over the term of the MOU. Historically, the Friends and Foundation have 
contributed much more than this amount on an annual basis and are planning to 
contribute approximately S2 million in 2000/2001 . This figure was determined by the 
traditional allocation that the Friends of the Library had made to the Library, which has 
been made from existing assets that the Friends already had available to them. Larger 
contributions are usually generated by specific capital campaigns; and, because these 
campaigns change depending on library needs, we did not feel it was appropriate or 
prudent to determine the minimal contribution level based on fluctuating capital 
campaign contributions. 

Lack of control by the Library Commission o>. tr the activities of the Friends and 
Foundation: The Library Commission reviewed this MOU in detail and did not believe 
that the Commission or the City Librarian, as their representative, lacked adequate 
control over the Friends and Foundation activiues. In fact, the MOU is the document that 
outlines the operating agreement between the two entities and stipulates that the City 
Librarian provide approvals for many specific activiues undertaken by the Friends and 
Foundation. Library stall meet on a regular basis with the Fnends and Foundation staff. 
The Friends and Foundation makes regular reports to the Library Commission regarding 
their activities. Communication between the two organizations is very good; and goals 
and priorities for each organization arc developed in a mutually cooperative fashion. 

Lack of disclosure regarding Friends and Foundation activities: As stated in the 
MOU, the Friends and Foundation are required to comply with all applicable provisions 
of the San Francisco charter and Administrative Code, including the newly revised 
"Sunshine Ordinance". .Also, through the Ordinance which accompanies the MOU, the 
Library is required to report to die Controller and to the Clerk of the Board of 
Supervisors, on an annual basis, a listing of the gifts accepted by the Library from the 
Friends and Foundation and a summary of how those gifts were expended by the Library. 
The Friends and Foundation comply with all legal requirements applicable to a non-profit 
501/c/3 corporation. The Fnends and Foundation Board meetings are held in the Main 
Library and are open to the public. The Board meeting times and dates are posted on the 
website of the Friends and Foundation. Meeting minutes are available to anyone upon 
request. 

Library staff has met with representatives of SEIU, Local 790, regarding their concerns 
about the MOU and is providing members of the Finance Committee with a detailed 
response to those concerns. I would like to note the following specific items. 

Use of Library membership list for solicitation mailings (Section 1.7): The Union 
voiced concern regarding this issue and 1 have reviewed it with closely with the City 
Attorney. According to the City Attorney, Section 1.7 provides that solicitation materials, 
as well as all other written communications, from the Friends and Foundation to Library 
members are subject tot he City Librarian's prior approval. As part of this approval 



sn 



lul-27-OO 08:42 , _ 

Attachment I 
Page 3 of 3 



power, the City Librarian may withhold approval of solicitation material mailings to 
patrons who expressly request not to receive such materials. 

Notice of terms of pledges and gifts (Section 1-5): The Union voiced concern regarding 
this section in that they believed that the proposed language does not give the City 
Librarian the authority to refuse pledges or gifts. Again, according to the City Attorney, 
the proposed MOU gives the City Librarian the authority to accept gifts, but it does not 
oblige the Library to accept any gift Also, the City Librarian must receive aporoval from 
the Board of Supervisors to receive individual gifts in excess of 525,000. 

The Union also voiced concerns regarding accessibility of information regarding the 
Friends and Foundation operations and activities. Those concerns are addressed under the 
previous section in this document, "lack of disclosure regarding Friends and Foundations 
activities". 



Attachment II 




Julv P 7000 San Frandsco Public Library 



TO: Severin Campbell, Budget Analyst 
Budget Analyst's Office 



'ji 



FR: Susan Hildreth, Acting City Librarian 

RE: PROPOSED .AMENDMENT TO CCS 7 ADMINISTRATIVE CODE 



The Public Library has enjoyed a longstanding and beneficial relationship with the 
Friends of the San Francisco Public Library and the Library Foundation of San Francisco. 
Last year these two entities merged into a single organization - the Fnends & Foundation 
of the San Francisco Public Library - which continues to provide substantial financial 
support for Library programs and activities through private gifts, donations, and bequests. 
The public/private partnership fostered through the years between the Public Library and 
the Friends & Foundation has greatly benefited the Library, the City, and the public who 
use the Library's services. The proposed amendment to the Administrative Code would 
provide the following three benefits: 



Facilitate timely implementation of activities funded through gift funds received from 
the Friends & Foundation. 



2. Reduces the Library's administrative processing of various small gifts orovided bv 
the Friends & Foundation without compromising the need for public disclosure of 
funds received and spent. 

3. Reduces administrative workload for the Board and its committees by eliminating the 
need to refer routine matters to the Board for consideration. This will be 
accomplished without diminishing the Board's oversight responsibility through 
annual reporting by the Library on gifts received from the Foundation that are less 
than 525,000. 

^ e apDreciate vour review and strong urse vour suDDon for this amendment. 



S2 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

Item 3 - File 00-1229 



Department: 



Item: 



Description: 



Port 

Police Department 

Ordinance amending Article 23 of the San Francisco 
Municipal Code (Police Code), "Regulation for Port Area, 
Section 16.12, Non-compliance with Orders of the 
Commission as Misdemeanor" to allow violations to be 
charged either as a misdemeanor or an infraction with 
monetary fines. 

Currently, the Police Code, Article 23, "Regulation for 
Port Area, Section 16.12, Noncompliance with Orders of 
the Commission as Misdemeanor" imposes only criminal 
misdemeanor penalties for violations of Port rules 
regulating the harbor and vessels. The proposed 
amendment to Article 23, Section 16.12 of the Police Code 
would allow such violations to be charged either as 
misdemeanors or as civil infractions punishable with 
monetary fines. 

Under the proposed ordinance, violations charged as an 
infraction would be punishable for the first offense by a 
fine of not less than $50 nor more than $100, and for a 
second offense and each additional offense, by a fine of not 
less than $150 nor more than $250. 



Comments: 



For misdemeanors, the current Police Code does not 
define the level of punishment or related fines. The 
subject ordinance would thus also amend Article 23, 
Section 16.12 to specify that individuals convicted of 
misdemeanors shall be punished by a fine of not more 
than $500 or by imprisonment in the County Jail for a 
period of not more than six months, or by both a fine and 
imprisonment. 

1. According to Mr. John Davey, Chief Wharfinger of the 
Port, the subject ordinance would apply only to the 
violation of regulations that fall under the Port 
Commission's jurisdiction (See Comment No. 2 below). 
Mr. Davey advises that a variety of State and Federal 
agencies have jurisdiction over the Bay, including the 
United States Coast Guard, the State Department of Fish 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



and Game and the State Department of Boating and 
Waterways. The Police Department's Marine Unit 
enforces Port Commission regulations in the Bay. 

2. The subject ordinance states that the proposed 
amendment to Article 23, Section 16.12 of the Police Code, 
to allow violations of Port regulations to be charged as an 
infraction with monetary fines would apply to "[e]very 
master, agent, or owner of any vessel, who does not obey 
the lawful orders or directions of the [Port] Commission in 
any matter pertaining to the regulations of the harbor, or 
the removal or stationing of any vessel." According to Mr. 
Neil Sekhri of the City Attorney's Office, Article 23 of the 
Police Code already authorizes the Police Department to 
enforce Port regulations included in the Port Code, as well 
as additional Port Commission regulations related to the 
harbor and vessels not included in the Port Code. Mr. 
Sekhri advises that the Port Code already states that any 
violations of Port Code regulations can be cited as either 
an infraction or a misdemeanor. However, as the Police 
Code is currently written. Port Commission regulations 
not included in the Port Code can only be charged as a 
mi -demeanor. Therefore, the subject amendment to the 
Police Code extends the option to cite violations as either 
an infraction or a misdemeanor to Port Commission 
regulations not included in the Port Code. According to 
Mr. Sekhri, examples of the regulations that would fall 
under the subject ordinance include certain restrictions 
on boat speed and mooring vessels. 

3. According to Mr. Davey, the proposed infraction 
provision with monetary fines would allow the Police 
Department more flexibdity in enforcing Port Commission 
regulations. Mr. Davey advises most violations of Port 
Commission regulations, such as mooring in an 
unauthorized location or speeding in restricted zones, do 
not warrant a criminal misdemeanor charge, which would 
require a notice to appear in court. Therefore, Police 
Officers assigned to the Police Department's Marine Unit 
often do not have the option to cite an individual with a 
charge appropriate for that individual's violation, 
according to Mr. Davey. For example, if a Police Officer 
discovers a boat mooring at an unauthorized site at the 
Port, the Police Officer has two options: either verbally 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



54 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



warn the boat-owners that they have violated Port 
regulations and ask the owners to move their vessel, or 
cite the individuals with a criminal misdemeanor. Mr. 
Davey advises that the subject ordinance would 
additionally allow Police Officers a third, and often more 
appropriate, option: to cite the boat-owners with an 
infraction and a fine. 

4. According to Mr. Davey, the Port is unable at this time 
to provide estimates for increased revenue resulting from 
the fines to be imposed by the proposed amendment to the 
Police Code, Article 23, Section 16.12. As stated 
previously, the proposed ordinance would charge a fine for 
infractions of $50 to $100 for the first offense, and $150 to 
$250 for each additional offense. Mr. Davey advises that 
since the Police Code currently does not allow the Police 
Department's Marine Unit to issue infractions for 
violations covered under the proposed ordinance, the 
Police Department has no historical data on which to base 
such a revenue projection. However, Mr. Davey advises 
that the Port did not propose the subject ordinance to 
impose fines as a means to increase revenue, but rather to 
serve as a deterrent to willfully negligent acts, and to 
allow Police Officers assigned to the Port more flexibility 
in the way that they charge willfully negligent acts. 

5. The subject amendment to Article 23, Section 16.12 of 
the Police Code states that the District Attorney shall 
determine whether each violation should be charged as a 
misdemeanor or an infraction. According to Mr. Jerry 
Coleman of the District Attorney's Office, the District 
Attorney's Office would review all violations to determine 
whether or not the District Attorney's Office should press 
charges. Mr. Coleman advises that this is standard 
practice for the District Attorney's Office and that the 
subject ordinance should not significantly increase their 
workload. According to Mr. Coleman, individuals charged 
with an infraction under the proposed amendment would 
maintain all standard rights for appeal provided under 
the City's Penal Code. 

6. As stated previously, the proposed ordinance would 
charge a fine for infractions of $50 to $100 for the first 
offense, and $150 to $250 for each additional offense. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



According to Mr. Davey, the Port will coordinate with the 
Police Department and the District Attorney's Office to 
create a schedule setting forth specified fines for each 
infraction that falls under the proposed ordinance. 

7. Mr. Davey advises that the subject amendment to the 
Police Code corresponds to several additional changes to 
Port Commission regulations. In an effort to better 
regulate activities around the new China Basin Fern 
Terminal located at Pacific Bell Park, the Port 
Commission amended the Port Commission's regulations 
on May 30, 2000 (Resolution No. 00-37) in order to: (1) 
prohibit embarking or disembarking of persons on or 
immediately in front of ferry terminals without prior 
consent from the Port; (2) prohibit mooring of vessels on 
or immediately in front of ferry terminals without prior 
consent from the Port; and, (3) limit vessel speeds in 
China Basin to no more than five nautical miles per hour 
(5 knots). The proposed amendment to include an 
infraction provision in the Police Code, Article 23, Section 
L6.12, would apply to all three of the above new 
regulations, as well as to existing Port Commission 
regulations 

8. According to Sergeant Danny Lopez, Officer in Charge 
of the Police Department 's Marine Unit, the Police 
Department supports the proposed ordinance. Sergeant 
Lopez advises that proposed ordinance would allow Police 
Officers much-needed flexibility in their ability to enforce 
Port Commission regulations. 



Recommendation: Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Item 4 -File 00-1254 

Department: 

Item: 



Services to be 
Performed: 

Description: 



Airport 

Resolution concurring with the Controller's certification 
that Airport Information Booth Services at San Francisco 
International Airport can continue to be practically 
performed by a private contractor at a lower cost than if 
work were performed by City and County employees. 



Airport Information Booth Services 

The Airport Information Booth Services Program, which 
is operated daily from 8 a.m. to 1 a.m., was established by 
the Airport in 1990 to provide centralized locations for the 
purpose of (a) providing information to air passengers 
regarding Airport facilities and services, available ground 
transportation services, regional hotel accommodations, 
and visitor services and events; and (b) selling transit 
passes for regional public transportation systems to 
employees. The Airport currently has a total of five 
information booths on the Arrival Level of the existing 
three terminals at the Airport. Currently, there are two 
booths in the North Terminal, two booths in the South 
Terminal, and one booth in the International Terminal. 
Beginning August 15, 2000, two new booths will be added 
to the New International Terminal, and on September 26, 
2000, operation of the booth in the old International 
Terminal will be discontinued. This will leave the Airport 
with a total of 6 information booths. 

Polaris Research and Development, Inc., a private 
contractor, has provided information booth services to the 
Airport since the establishment of the program in 1990. 

Charter Section 10.104 provides that the City may 
contract with private firms for services that can be 
practically performed for a lower cost than similar work 
by City and County employees. 

The Controller has determined that contracting for the 
Airport Information Booth Services at the Airport for FY 
2000-2001 would result in estimated savings as follows: 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Citv-Operated Service Costs 


Lowest 

Salary 

Step 


Highest 

Salary 

Step 


Salaries 
Fringe benefits 

Total 


$1,831,187 

517.470 

$2,348,657 


$2,158,000 

568.790 

$2,726,790 


Contractual Service Cost 1 


1.623.281 


1.624.656 


Estimated Savings 


$ 725,376 


$1,102,134 



Comments: 1. The Airport reports that Airport Information Booth 

Services were first certified as contractual services as 
required under Proposition J (Charter Section 10.104) in 
1990, and have been continuously provided by an outside 
contract since then. 

2. Ms. B.'th Mingle of the Airport reports that the current 
Aii-port Information Booth Services Program contract 
with Polaris Research and Development, Inc. began on 
October 15, 1995. The contract term was for one year, 
with four annual renewals up to a maximum term of five 
is. The original contract, including the four annual 
renewals, will expire on October 14, 2000. According to 
Ms. Mingle, at the end of the current one-year renewal 
period on October 14, 2000 the Airport plans to extend the 
contract with Polaris for one additional twelve-month 
period from October 15, 2000, through October 14. 2001. 
According to Ms. Mingle, prior to the contract extension 
period ending on October 14, 2001, the Airport will 
conduct a competitive selection for operation for the 
Information Booth Services. Ms. Mingle states that the 
current contract with Polaris is being extended for one 
additional year because delays in the opening of the new 
International Terminal could potentially have resulted in 
a new contractor commencing operation of the booths at 
the same time as the opening of the new International 



1 Contractual Service Costs include high and low estimates of contract monitoring expenses by 
airport staff, according to Mr. Joe Matrenga of the Controller's Office. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Terminal. Ms. Mingle states that the Airport preferred to 
avoid this complication. 

3. The Contractual Services cost used for the purpose of 
this analysis is based on the current contractor's costs to 
provide Information Booth Services for the twelve-month 
period from October 15, 2000 through October 14, 2001. 

4. The maximum FY 2000-01 Contractual Services Cost of 
$1,624,656 is $62,449, or 4 percent, more than the FY 
1999-2000 cost of $1,562,207. The minimum FY 2000-01 
Contractual Services Cost of $1,623,281 is $61,074, or 
approximately 4 percent more than the FY 1999-2000 
cost. 

5. The Controller's supplemental questionnaire, with the 
Department's responses, is attached to this report. 



Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Attachment 



CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 



DEPARTMENT: SFIA Landside Operations 

CONTRACT SERVICES: Airport Information Booth Program 
CONTRACT PERIOD: October 1 5, 2000 - October 1 4~ 200 1 



(1) Who performed the activity/service prior to contracting out? 

Polaris Research and Development has performed these services since the program's inception in 
1990. Airport Commission Resolution No. 99-0388 modifies the existing contract by extending 
the term of the contract for one additional renewal option through October 14. 2001 . 

(2) How many City employees were laid off as a result of contracting out? 

None. 

(3) Explain the disposition of employees if tbev were not laid off. 

N/A 

(4) What percentage of City employees' time is spent on services to be contracted out? 
Approx. 10%. 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing 
request for contracting out? 

Services have been contracted out since program inception on October 15. 1990. This will be an ongoing 
request for contracting out. 

(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each 
subsequent year? 

It was first certified in Fiscal Year 1990/91, it has been certified each subsequent year. 

(7) How will the services meet the goals of your MBEAVBE Action Plan? 

The firm is registered as a large local MBE firm with the Human Rights Commission. The contractor is 
required to demonstrate "best efforts" to achieve at least a 20 O/ o goal to utilize local MBEs and WBEs as 
subcontractors, vendors and suppliers. 

(8) Does the proposed contract require that the contractor provide health insurance for its employees? 
Even if not required, are health benefits provided? 

Although the contract does not require that the Contractor provide health benefits, the Contractor does 
offer a full benefits package to employees including health and disability coverage, life insurance, sick 
leave and vacation pay. The Contractor also provides a 40 IK retirement program for employees. 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same 
benefits provided to employees with domestic partners? If not. how does the proposed contractor 
comply with the Domestic Partners ordinance? 

Polaris provides benefits to employees with spouses and offers these benefits to domestic partners. 

Department Representative: Alice Sgourakis 

Telephone Number: (650) 82 1-6516 



062215D.irl 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

Item 5 - File 00-1289 



Department: 
Item: 

Location: 
Purpose of Lease: 
Lessor: 
Lessee: 

Square Footage: 
Cost Per Month: 
Annual Cost: 
Term of Lease: 



Right of Renewal: 

Utilities and 
Maintenance: 

Source of Funds: 

Description: 



Department of Real Estate (DRE) 
Department of Parking and Traffic (DPT) 

Resolution authorizing a new lease of real property at 10 th 
and Bryant Streets for the Department of Parking and 
Traffic. 

10 th and Bryant Streets 

Rental of surface parking lot 

State of California 

City and County of San Francisco 

12,176 square feet 

$1,500 

$18,000 ($1.48 per square foot) 

Six months with six-month option to extend, for a total of 
one year. According to Ms. Claudine Venegas of DRE, the 
expected commencement date would be September 1, 2000 
and would continue through August 31, 2001 if both parties 
exercise the option to extend. 

Ms. Venegas states that the lease would be renewable each 
year for six months, with a six month option to extend, 
subject to Board of Supervisors approval. 

The City will be responsible for utilities and maintenance. 

FY 2000-01 DPT budget 

DPT proposes to use the surface parking lot at 10 th and 
Bryant Streets as a secondary staging area for the Parking 
Enforcement Division. According to DPT, the current 
Parking Enforcement Division location at 505 7 th Street is 
overcrowded and can not accommodate 24 additional 
Parking Control Officer (PCO) staff included in the FY 
2000-01 budget. Two trailers would be located at the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



subject site to be used for locker room and office space for 
PCO staff. In addition to the two trailers, the subject 
parking lot would contain 10 parking spaces to be used for 
DPT vans and Cushman carts currently parked at the 
parking lot on 6 th Street between Townsend and Brannan 
Streets. According to Ms. Julia Dawson of DPT, the parking 
lot at 6 th and Townsend Streets, which is leased from the 
State Caltrans, is over capacity, and some of the DPT 
vehicles which are located at that site are required to park 
on the street 



Comments: 



1. According to Ms. Venegas, the proposed rent of $1,500 
monthly, or $18,000 annually, for lli. 176 square feet of 
surface parking lot represents fair market value. Ms. 
Venegas states that the City currently has 7 leases with 
Caltrans for surface parking lots and that the subject lease 
represents the standard lease agreement between the City 
and Caltrans 



2 According to Ms. Dawson, DPT included $21,800 in the 
FY ^000-01 budget for utilities and the lease of two trailers 
to be used at the subject Bite 

3. Ms. Dawson states that Caltrans seismic retrofitting 
work to the base of the Bay Bridge and the construction of a 
new temporary road bed located near 2 nd Street between 
Bryant and Harrison Streets, which will take 
approximately 6 years to complete, will change traffic flow 
in the surrounding area. Ms. Dawson advises that some of 
the PCO Btaff and vehicles to be located at the proposed 
new 10 th and Bryant Streets site would be assigned to 
mitigate traffic congestion resulting from such change.- 
shown in the attached memorandum (Attachment), 
provided by Ms. Dawson, the Caltrans retrofit work was 
scheduled to begin in September of 2000 but has been 
delayed until May of 2001. According to Ms. Dawson, DPT 
is currently negotiating with Caltrans to determine the 
amount that Caltrans will pay to the City for the cost of 
PCO staff to mitigate traffic congestion resulting from the 
Bay Bridge seismic retrofitting work. 



Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



27' OO(THU) 11:32 CITY St CO OF S. F. PARKING DEPT 



8 A N FBANCiacO 



- . Attachment 
City and County of San Francisco 




DEPARTMENT OF PARKINQ k TRAFFIC 



WILLIE LEWIS BROWN. JR.. Utyor 

FRED M. HAMDUN. EXECUTIVE DIRECTOR 




To: 

From: 

Through: 

Subject: 

Date: 



MEMORANDUM 

Budget Analyst, Board of Supervisors 

Julia Dawson, Deputy Director, Administration and Finance-^)j^j^__^ 

Fred M. Hamdun, Executive Director (^y 

Lease of Real Property at 10 th and Bryant and Caltrans Retrofit 

July 27, 2000 



The Department of Real Estate has submitted on behalf of the Department of Parking and 
Traffic a resolution authorizing the lease of realpropeTty-arlO^ariCBrymif The 
department intends to use this location as a secondary staging area for our Parking 
Enforcement Division. Originally, we had planned to use the lO 1 * 1 and Bryant lot as a 
place to locate the additional officers who will be needed to. perform traffic control duties 
for the Caltrans Bay Bridge retrofit project. The retrofit project was originally'scheduled 
to begin in September 2000 but Caltrans has delayed the project until "May 2001. 

In the FY 2000/01 budget, the department received 27 new positions for its Enforcement 
Division, 24 of which areParking Control Officers. Our current Enforcement location at 
505 7 th Street is overcrowded and the division does not have "sufficient locker room and 
office space to house the new positions- As" a result, our department plans to use the 10 lh 
and Bryant site to house these additional officers. 



13) 5S4-FARK FAX (415) 954-4834 



25 Van Nasa Av«nua, Suite 410 



San Frenclaco. CA 94102-4476 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Item 6 - File 1298 

Department: 

Item: 



Mayor's Office of Housing (MOH) 

Resolution authorizing the issuance and delivery of 
Multifamily Housing Revenue Bonds in an aggregate 
principal amount not to exceed $17,000,000 for the 
purpose of refunding bonds previously issued to provide 
financing for a multifamily rental housing project; 
authorizing the sale of the bonds; approving the form of 
and authorizing the execution of: (1) an indenture 
providing the terms and conditions of the bonds; (2) the 
bond purchase agreement providing the terms and 
conditions for the sale of the bonds; (3) an amended and 
restated regulatory agreement and declaration of 
restrictive covenants; (4) a financing agreement; (5) a 
remarketing agreement; approving the form of and 
authorizing the preparation and distribution of a 
preliminary official statement and the preparation, 
execution and distribution of an official statement 
relating to the bonds; approving the form of and 
authorizing the execution and delivery of any document 
necessary to implement this resolution; ratifying and 
approving any action heretofore taken in connection with 
the bonds, the project and the refunding of the prior 
bonds: and related matters. 



Amount: 



Not to exceed $17,000,000 



Description: 



In 1985, the Housing Authority financed the construction 
of a 248-unit multifamily rental housing development 
known as the Post Street Towers located at 737 Post 
Street ("the Project"), with the issuance of $27,000,000 in 
Multifamily Housing Revenue Bonds, and made a loan of 
the net proceeds to a company called Metro-Post (See 
Comment No. 4). According to Mr. Joe LaTorre of the 
Mayor's Office of Housing (MOH). the current outstanding 
debt on the $27,000,000 in prior 1985 bonds is 
approximately $17,000,000. The Post Street Towers is a 
20 percent affordable housing development project (50 of 
the total 248 units are below-market rate rentals for low- 
income households). (See Comment No. 8 below for 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 

definitions of "affordable" housing and "low-income" 
households.) 

The subject resolution would authorize the City to issue 
Multifamily Housing Revenue Bonds ("Refunding Bonds") 
in an amount not to exceed $17,000,000 to refinance, or 
"refund," the prior 1985 Revenue Bonds issued by the 
Housing Authority. According to Mr. LaTorre, MOH 
expects to issue the entire $17,000,000 in tax-exempt 
Refunding Bonds. 

The City's authority to issue the proposed $17,000,000 in 
Refunding Bonds comes from Article I, Chapter 43 of the 
Administrative Code, entitled the Residential Mortgage 
Revenue Bond Law, and Section 9.107 of the Charter. 
These provisions authorize the City to incur bonded 
indebtedness for the purpose of financing or refinancing 
housing mortgages (see Comment No. 1). Therefore, the 
City can issue Refunding Bonds to provide funding to 
develop or refinance low- and moderate-income multi- 
family rental housing and to provide below-market rate 
mortgages for low- to moderate-income first-time home 
buyers. Bondholders of these Refunding Bonds are paid 
from the revenues generated from rental housing projects 
or the repayment of single-home mortgages. According to 
Ms. Michelle Sexton of the City Attorney's Office, these 
mortgage Refunding Bonds do not require the City to 
pledge repayment of the bonds, and the City has no legal 
liability with respect to the repayment of the Refunding 
Bonds. With rental developments, the bondholders' have 
only two forms of recourse for payment: (1) the project 
rental revenues, and (2) credit enhancement (such as 
bond insurance or letters of credit) held by project 
developers, provided by private parties. 

The prior 1985 Revenue Bonds were issued with a 22-year 
term at a variable interest rate, with a final payment date 
of December 1, 2007. MOH plans to issue the proposed 
$17,000,000 in tax-exempt Refunding Bonds with a 30- 
year term, also at a variable interest rate, with a final 
payment date of December 1, 2030. 

Comments: 1. According to Ms. Sexton, Chapter 43 of the 

Administrative Code and Section 9.107 of the Charter 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



provide the City authority to issue the proposed 
$17,000,000 in Refunding Bonds. Ms. Sexton advises that 
Section 9.109 of the Charter, which authorizes the City to 
issue Refunding Bonds, does not apply to the subject 
resolution, because Section 9.109 only authorizes the City 
to issue Refunding Bonds to refinance General Obligation 
Bonds and Revenue Bonds issued by the City. As stated 
previously, the prior 1985 Revenue Bonds were not issued 
by the City, but by the Housing Authority. Therefore, Ms. 
Sexton advises that the proposed $17,000,000 should be 
treated as new City Revenue Bonds, authorized under 
Chapter 43 of the Administrative Code and Section 9.107 
of the Charter. 

\ccording to Ms. Sexton, because the proposed 
100,000 in Revenue Bonds do not fall under Section 
9.109 of the Charter authorizing Refunding Bonds, as 
stated in Comment No. 1 above, the proposed $17,000,000 
in Revenue Bonds are not required to meet the 
requirement, stated in Section 9.109 of the Charter, that 
the issuance and sale of Refunding Bonds "...result in net 
debt service savings to the City and County on a present 
value ha- 
ir. LaTorre report.- that the property owners have 
been working with the underwriting firm of Newman and 
structure this project to receive new credit 
enhancement in the form of loan guarantees from Freddie 
Mar. Mr. LaTorre advises that the Freddie Mac loan 
guarantees would guarantee payment of the bonds over 
the 30-year life of the bonds, providing the property 
owners with security they did not have previously. 
According to Mr. LaTorre, under the terms of the 
Refunding Bonds. Freddie Macs credit enhancement will 
enable the bonds to receive a credit rating of AAA from 
Standard and Poors. Mr. LaTorre advises that the 
current 1985 Revenue bonds have a lower rating of AA/A- 
1+ from Standard and Poor's. The improved credit rating 
could potentially help the City to secure a lower interest 
rate for the proposed Refunding Bonds. However, such a 
lower interest rate would benefit the owners of the 
property and not the City, because, as stated by the City 
Attorney's Office, the City has no legal liability with 
respect to repayment of the proposed Refunding Bonds. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



Furthermore, according to Mr. LaTorre, since both the 
existing 1985 Revenue Bonds and the proposed Refunding 
Bonds have variable interest rates, which fluctuate 
weekly, the proposed Refunding Bonds may not result in 
any debt service savings over the 30-year term of the 
bonds. Mr. LaTorre advises that even without any debt- 
service savings, issuing the proposed $17,000,000 in 
Refunding Bonds would still benefit the property owners 
by allowing the owners to gain improved credit 
enhancement and bond ratings. Mr. LaTorre advises that 
the proposed Refunding Bonds would also benefit the City 
by extending the term of the 50 affordable housing units 
in the Post Street Towers by eight to 23 years (see 
Comment No. 7 below). 

4. According to Mr. LaTorre, the subject property was 
originally owned by a developer known as Metro-Post. As 
stated the Attachment, provided by MOH, the 
development experienced financial difficulties in the early 
1990s and was foreclosed by its original loan servicer, 
First Interstate Bank, and sold to Springview of 
California, Inc. In 1997, Springview of California, Inc. 
sold the property and development to its current joint 
owners: Whitecliff I Apartments Ltd., R. Ryder 
Construction, Inc., and L&R Associates-SF, LLC. 
According to MOH, and as stated in the Attachment, the 
development is financially healthy and the property 
owners now owe $17,000,000 of the original $27,000,000 
in Revenue Bonds. 

5. According to Mr. LaTorre, MOH expects to issue the 
proposed $17,000,000 in Refunding Bonds in late August 
of 2000. Neither the interest rate nor the final bond 
amount would be able to be set until the bonds are priced 
immediately before closing. Furthermore, the proposed 
Refunding Bonds would have a variable interest rate, 
which fluctuates once a week. According to Mr. LaTorre, 
the entire $17,000,000 in proposed Revenue Bonds would 
qualify as tax exempt. The subject resolution states that 
these tax-exempt bonds may not be issued initially at an 
interest rate that exceeds 8 percent. Mr. LaTorre advises 
that if the bonds were issued at this time, the tax-exempt 
bonds would have an estimated interest rate of 4.25 
percent. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



6. Mr. LaTorre reports that principal and interest 
payments on the prior 1985 Bonds are paid every three 
months, with the next payment due on September 1, 
2000. As noted above, MOH expects to issue the proposed 
Revenue Bonds in late August of 2000. Mr. LaTorre 
reports that in order to defease 1 the prior bonds on 
September 1, 2000, this subject resolution must be 
approved by the Finance Committee, adopted by the full 
Board of Supervisors, signed by the Mayor and the 
transaction closed prior to September 1, 2000. According 
in Mr. LaTorre, if the City does not meet these deadlines, 
retirement of the prior 1985 Bonds and issuance of the 
subject Refunding Bonds at the next interest payment 
date (December 1, 2000) would be contingent upon 
negotiations with Freddie Mac, the property developer, 
the underwriter, and other parties to extend approvals 
and agreements currently in place. 

7. Mr. LaTorre notes that the MOH also has a 22-year 
agreement with the developer of the Post Street Towers to 
maintain affordabihty standards, which will expire in 
2007 when the existing \'.<x~> Revenue Bonds mature. Mr. 
LaTorre advises that these affordabihty standards require 
the owners of the Post Street Towers to offer 20 percent of 
the rental units, or 50 of the 248 total units, at a below- 
market rat'' for low-income tenants (see Comment No. 8 
below). Once the original 1985 Revenue Bonds have been 
paid off in 2007, the regulatory agreement on the 
development would expire, and the owners of Post Street 
Towers would be free to convert the 50 below-market rate 
units to market rate. Mr. LaTorre advises that under the 
terms of the proposed Refunding Bonds, the property 
owners have agreed to extend the below-market rate 
restrictions for the life of the new bonds, now scheduled to 
mature in 2030. Even if the bonds were paid off early, the 
developers would be required to maintain the 50 below- 
market rate units until 2015. Therefore, Mr. LaTorre 
reports, the primary benefit to the City of issuing the 
subject Refunding Bonds is the extension of affordabihty 
on the 50 below-market rate units bv anvwhere from 



1 Defeasance is the term used to describe the termination of all rights and interests of the 
bondholders upon final payment of all debt service, in the manner required by the terms and 
conditions of the bond resolution. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



eight to 23 years (from 2007 until 2015 at the earliest or 
2030 at the latest). 

8. According to Mr. LaTorre, the affordability of the 50 
below-market rate units at Post Street Towers is defined 
by the Federal Tax Code as units affordable to households 
designated "low-income and below" by the Federal 
Department of Housing and Urban Development (HUD). 
HUD considers "low-income" to be approximately 75 
percent of the metropolitan statistical area median 
income. Mr. LaTorre advises the median income in the 
metropolitan statistical area for the year 2000 is $74,900, 
and that qualifying households in San Francisco must 
earn no more than $40,800 for a one-person household, no 
more than $46,650 for a two-person household, no more 
than $52,500 for a 3-person household, and no more than 
$58,300 for a 4-person household. According to Mr. 
LaTorre, the current monthly rent on the 50 affordable 
units in the Post Street Towers is $1,020 for 30 studios, 
$1,166 for 12 one-bedroom units, and $1,312 for 8 two- 
bedroom units. 

9. According to Mr. LaTorre, the owners of the subject 
property are paying for all costs of issuing the Refunding 
Bonds, including bond counsel, financial advisor fees and 
City Attorney costs. In addition, Mr. LaTorre advises that 
the property owners will reimburse MOH for reviewing 
and preparing documents relating to the subject bonds. 
Mr. LaTorre reports that property owners have not yet 
supplied to MOH the total cost to the property owners of 
issuing the Refunding Bonds. According to Mr. LaTorre, 
MOH will deposit any fees it receives for these services 
into the Housing Program Fees Fund, established by 
Administrative Code 10.117-100, to be used for 
administrative expenses in accordance with the 
requirements of the Administrative Code. 

10. According to Mr. LaTorre, and as stated in the 
Attachment, since 1985, the City has issued a total of 
$103 million in Multifamily Housing Revenue Bonds. 
These bonds have provided funds for below-market rate 
mortgages to developers of rental housing, with a portion 
of the units reserved for low-income households. Mr. 
LaTorre reports that since 1985, the program has 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 2, 2000 Finance and Labor Committee Meeting 



financed the development of 1,245 rental units in the 
City, including 315 units, or 25 percent, reserved for low- 
income households. 

11. According to Mr. LaTorre, and as stated in the 
Attachment, the bonds and related documents state 
clearly that the bondholders may only look to the 
revenues of the project the and the credit enhancement 
provider for payments of the principal and interest on the 
bunds. Therefore, as stated by the City Attorney's Office, 
the City will not be directly or indirectly liable for 
payments on the subject bonds. 

L2. In summary, the Budgel Analyst notes that: (1) the 
City would issue the proposed $17,000,000 in Mortgage 
Revenue Refunding Bonds, however, the property owners, 
not the City, would repay the bonds using mortgage 
revenues; (2) the City Attorney's Office states that the 
( Jity has no legal liability with respect to the repayment of 
the Refunding Bonds; (3) approval of the proposed 
Refunding Bonds would extend affordable housing for 50 
units in the Post Street Towers by eight to 23 years; and 
the property owners would benefit from the proposed 
Refunding Bonds by receiving an improved bond rating 
from Standard and Poor's. by receiving credit 
enhancement in the form of loan guarantees from Freddie 
Mac. and therefore providing the property owners with 
additional security and potentially lower interest rates on 
their bond debt 



Recommendation: Approve the proposed resolution. 




Harvey M. Rose 



Supervisor Yee 
Supervisor Bierman 
President Ammiano 
Clerk of the Board 
Controller 
Steve Kawa 



BOARD OF SUPERVISORS 
BUDGET ANALYST 




Attachment I 

MAYOR'S OFFICE OF HOUSING Page 1 ° f 2 
CITY AND COUNTY OF SAN FRANCISCO 



WILLIE LEWIS BROWN, JR. 
MAYOR 

MARCIA ROSEN 

MEMORANDUM DIRECT0R 

July 12,2000 

To: The Honorable Leland Yee, Chair, Finance and Labor Committee 

The Honorable Tom Ammiano, Board President 
The Honorable Sue Bierman 



From: Marcia Rosen 



Tn/£ 



Subject: Resolution Authorizing Issuance of Multifamily Housing 

Revenue Refunding Bonds (Post Street Towers) 



Requested Action: The Mayor's Office of Housing respectfully requests consideration of the 
attached resolution authorizing issuance of Multifamily Housing Revenue Refunding Bonds for 
Post Street Towers by the Finance and Labor Committee on Wednesday, July 26, 2000. 

Background: Since 1985, the City and County of San Francisco has issued a total of 

SI 03 million in Multifamily Housing Revenue Bonds. These bonds provided funds for below- 
market rate mortgages to developers of rental housing, with a portion of the units reserved for 
low income households. Since 1985, the program has financed development of 1,245 rental units 
in the City, including 3 1 5 units reserved for low income households. 

In general, repayments of these mortgages are used to make principal and interest payments on 
the bonds. The bonds are not "full faith and credit" obligations of the City and County of San 
Francisco; bondholders are guaranteed payment only from the mortgage revenues. 

This resolution authorizes the City to re-issue bonds originally issued by the San Francisco 
Housing Authority in 1985 for the financing of the Post Street Towers apartments at 737 Post 
Street. The property is a 248 unit building, with 50 units (20% of the total) set aside as below- 
market rate rentals. The development was completed in 1988. 

The current owner of the property is a partnership of Whitecliff I Apartments Ltd., R. Ryder 
Construction, Inc., and L&R Associates-SF, LLC. The development experienced financial 
difficulties in the early 1990s and was foreclosed by its original lender, First Interstate Bank, and 
sold to Springview of California, Inc., who in turn sold it to the current owners in 1997. The 
property now has only SI 7,000,000 of the original 527,000,000 in bonds outstanding, and is 
financially healthy. 

The owners have been working with the underwriting firm of Newman and Associates to 



25 VAN NESS AVENUE. SUITE 600 • SA.N FRANCISCO, CALIFORNIA 94102 • (415)252.3177 • FAX (415) 252-3140 

TDD (41 5) 252-3107 



Attachment I 
Page 2 of 2 



Multifamily Housing Revenue Refunding Bonds (Post Street Towers) 
July 12, 2000 
Page 2 



structure this project to receive new credit enhancement from Freddie Mac. Under the terms of 
the refunding bonds, Freddie Mac's credit enhancement will enable the bonds to receive a credit 
rating of .AAA from Standard and Poor's. The owners are paying all costs of the transaction: 
bond counsel and financial advisor fees, and the City Attorney costs. 

The current bonds on the property mature and would be fully paid off in 2007. At that time, the 
regulatory agreement on the development would expire, and the owner would be free to convert 
the 50 below-market rate units to market rate. Under the terms of the refunding, the owners 
agree to extend the below-market rate restrictions for the life of the new bonds, now scheduled 
to mature in 2030. Even if the bonds are paid off early, the below-market rate uruts must be 
maintained until 2015. The pnmary benefit to the City is, therefore, the extension-of 
affordability on the below-market rate units beyond 2007. 

Fiscal Impact: The bonds and related documents clearly state that the bondholders may 

look only to the revenues of the project and to the credit enhancement provider for payments of 
principal and interest on the bonds. Therefore, the City will not be directly or indirectly liable 
for payments on the bonds. 

The costs of issuing the refunding bonds will be paid by the owners of the property. These costs 
will include the costs of the City Attorney's office and of the Mayor's Office of Housing for 
reviewing and preparing documents and other actions relating to the transaction. Funds received 
by the Mayor's Office of Housing will be deposited into the Housing Program Fees Fund 
established by Administrative Code 10.1 17-100, to be used for administrative expenses in 
accordance with the requirements of the Code. 

Additional Information: The resolution will be introduced at the Board of Supervisors on 
Monday, July 17, 2000. Bond related documents to be approved by reference in the resolution 
are included in the file. Please contact Joe LaTorre of the Mayor's Office of Housing at 252- 
3188 if you have any questions. 



Cc: Harvey Rose, Budget .Analyst 
Susan Leal, Treasurer 
Ed Harrington, Controller 



^ 



&4 




City and County ofjSan Francisco 

lyleeting Minutes 

Finance and Labor Committee 

Members: Supervisors Leland Yee, Sue Merman, Tom Ammiano 
Clerk: Mary Red 



City Hall 

1 Dr. Carlton B. 

Goodlett Place 

San Francisco, CA 

94102-4689 



Wednesday, August 09, 2000 



fit 



10:00 AM 

Regular Meeting 



City Hall, Room 263 



Members Present: Leland Y. Yee, Sue Bierman, Tom Ammiano. 



Meeting Convened 

The meeting Convened at 10:08 a.m. 

001337 [Amending the Health Code to establish patient rates for services effective July 1, 2000] 

Ordinance amending Part II, Chapter V, of the San Francisco Municipal Code (Health Code) by amending 
Section 128 thereof, to fix patient rates for services furnished by Department of Public Health, retroactively to 
July 1, 2000. (Public Health Department) 
7/19/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose. Budget Analyst: Monique Zmuda. Chief Financial Officer, 
Department of Public Health. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001428 [Government Funding - Rent Arbitration Board] 

Ordinance appropriating 5388,412 of Rent Arbitration Board Special Revenue Funds for salaries, fringe 

benefits, training and professional services to improve customer service to the public and eliminate work 

backlog for the Rent Arbitration Board for fiscal year 2000-2001. Placing SI 04,079 on reserve. 

7/31/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Joe Grubb, Executive Director, Rent 

Arbitration Board; Supervisor Yee. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 

Ordinance appropriating $327,699 of Rent Arbitration Board Special Revenue Funds for salaries, fringe 
benefits, training and professional services to improve customer service to the public and eliminate work 
backlog for the Rent Arbitration Board for fiscal year 2000-2001; ratifying actions previously taken. 
RECOMMENDED AS AMENDED by the following vote: DOCUMENTS DEPT 

Ayes: 3 - Yee, Bierman, Ammiano 



SEP 1 8 20G0 

SAN FRANCISCO 
PUBLIC LIBRARY 



City and County of San Francisco 



Printed at 11:40 AM on 8/14/00 



I inuncc and Labor Committee 



Meeting Minute* 



iugUSt 9, 2tlllll 



001264 (Increase Annual Residential Rent Ordinance Fee| 
Supervisor Ammianu 
Ordinance amending Administrative Code Chapter 37A "Residential Kent Stabilization and Arbitration Pee" 

by amending Sections 37A.2 and 37. A. 6, to increase the maximum annual Residential Rent Ordinance fee 
from $ 1 6 to $ 1 9 per unit for fiscal year 2000-200 1 , and to provide that no more than S 1 6 per unit may be 
passed through from the landlord to the tenant(s). 

(Amends Sections 37A.2 and 37. A. 6.) 

7/10/00, RECEIVED AND ASSIGNED to Finance and Labor C ui l ll l ll BBC 

Heard in Committee Speakers Harve) Rose. Budget Analyst, JoeGrubb, Executive Director, Rent 

Arbitration Hoard. Supervisor Yee. 
KK OM MENDED b> the following \ote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001272 (Minimum Compensation Ordinance! 

Mayor, Supervisors Ammiano, Beeerril, Bierman. Brown. Kat/. Kaufman. I .eno. Vwsom. I inu. 'S aki. 
Yee 

Ordinance amending the San Francisco Administrative ( ode by adding Chapter I2N, encompassing Sections 
12N.1 to 12N.13, to provide that a prescribed minimum level of compensation be paid to employees of 
contractors pro\ iding sen ices to the ( Sty and County, to employees of their subcontractors, and to employees 
of tenants and subtenants on Airport property and their subcontractors; and amending Chapter 70 of the San 
Francisco Administrative Code by adding Section 70.1 1 to provide that employees of the in-home supportive 
services public authority be paid the specified minimum compensation 

(Adds Chapter 12N Sections I2N.1 to 12N 13; adds Section 70 1 1 . amends Chapter 70.) 
7/10/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee Speakers Supervisor Ammiano, Hanev Rate, Budget Analyst, Supervisor Yee. Erin 
McGrath. Mayor's Office, John Holtzman. Mayor's Office. Ken Bruce. Budget Analyst's Office, Mathcu 
Hymel, Controller's Office: Paula Jenson. Deputy City Attorney. Jim lllig. Chair. Living Wage Task Force, 
Father Peter Sammon. St. Teresa's Church. Glynn Washington, Human Services Network, Halter Johnson. 
S.F. Labor Council. Richard On. Barry Hcrmanson. Living Wage < 'oolitton, Mark Solomon. Michael Petrelis. 
VMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 

Ordinance amending the San Francisco Administrative Code by adding Chapter 12P. encompassing Sections 
12P. 1 to 12P. 16, to provide that a prescribed minimum level of compensation be paid to employees of 
contractors providing services to the City and County, to employees of their subcontractors, and to employees 
of tenants and subtenants on Airport property and their contractors; and amending Chapter 70 of the San 
Francisco Administrative Code by adding Section 70.1 1 to provide that employees of the in-home supportive 
services public authority be paid the specified minimum compensation 

(Adds Chapter 12P Sections 12P.1 to 12P.16; amends Chapter 70; adds Section 70.1 1.) 
RECOMMENDED \s AMENDED by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 



Printed at 11:40 AM on 8.14.00 



Finance and Labor Committee 



Meeting Minutes 



August 9, 2000 



001299 [Jurisdictional Transfer of Hallidie Plaza from Adm. Services to DPW] 

Resolution transferring jurisdiction of real property from the Department of Administrative Services to the 
Department of Public Works identified as Assessor's Block 341 Lot Nos. 13 and 14 and sub-surface area of 
Cyril Magnin Street between Lot Nos. 13 and 14 (Hallidie Plaza). (Real Estate Department) 
7/13/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 
Heard in Committee. Speakers: Tony DeLucchi, Real Estate Department. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001342 [Reserved Funds, Mayor's Office of Community Development] 

Hearing to consider release of reserved funds, Mayor's Office of Community Development (2000 Community 
Development Block Grant Program: File 000488 - Resolution No. 349-00), in the amount of $90,000 to fund 
the Lavender Youth Resource and Information Center (LYRIC) project at 127 Collingwood Street, San 
Francisco. (Mayor) 

7/19/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Jon Pon, Mayor's Office of Community Development; Supervisor Yee. 
Release of reserved funds in the amount of $90, 000 approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001343 [Reserved Funds, Mayor's Office of Community Development] 

Hearing to consider release of reserved funds, Mayor's Office of Community Development (2000 Emergency 
Shelter Grants Program: File 000486 - Resolution No. 347-00), in the amount of $15,000 for Central City 
Hospitality House at 290 Turk Street, and $25,000 for San Francisco Eviction Defense Collaborative at 942 
Market Street. (Mayor) 
7/19/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Jon Pon, Mayor's Office of Community 
Development. 

Release of reserved funds in the amount of $40,000 approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001305 [Reserved Funds, Department of Public Health] 

Hearing to-consider release of reserved funds, Department of Public Health, (Ordinance No. 308-98, Mangini 
settlement revenue), in the amount of $497,769 to fund Phase II of the tobacco prevention program. (Public 
Health Department) 

7/13/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Monique Zmuda, Chief Finanical Officer, 
Department of Public Health. 
Amended to release $21 1,190. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 



Printed at 1 1 :40 AM on 8/14/00 



I- limine and Labor Committee Wetting \tinutc\ lugwt9,2999 



001329 (Appointments - San Francisco Local Agency Formation Committee| 
Supervisor Ammiano 

Draft motion appointing three Supervisors to the San Francisco Local Agency Formation Commission, and 
appointing two Supervisors as alternate members. 

(Under State law, the Board of Supervisors shall appoint two of its members as LAFCO members. Seats 1 and 

2; and shall appoint one other member lor the Mayor) as a third I \l ■< '< I member. Seat 3 In addition, the 

Board shall appoint two of its members as alternates - one alternate to Seats 1 and 2, and a second alternate to 

the third seat.) 

7/17/00. RECEIVED AND ASSIGNED lo Rules Committee 

8/2/00, TRANSHERRED to Finance and Labor Committee 

Heard in Committee Speakers Supervisor Ammiano, TedLakey, Deputy Cit) Attorney. Bnue Brugmann. 
Jeff Sheeny . Richard Che 

Amended to add Supervisors Ammiano. Bierman and )aki as members, and Supervisors Lena and Kaufman as 
alternate members. 
\M ENDED. 

Motion appointing Supervisors Ammiano. Bierman and Yaki to the San Francisco Local Agency Formation 
Commission, and appointing Supervisors Leno and Kaufman as alternate members. 

(Under State law, the Board of Supervisors shall appoint two of its members as LAFCO members. Seats 1 and 
2; and shall appoint one other member lor the Mayor) as a third LAFCO member. Seat 3. In addition, the 
Board shall appoint two of its members as alternates - one alternate to Seats 1 and 2, and a second alternate to 
the third seat.) 

RECOMMENDED AS AMENDED by the following vote: 
Ayes: 3 - Yee. Bierman, Ammiano 



001279 |Housing Emergency Declaration! 

Supervisors Ammiano. Becerril. Bierman. k.it/ 

Resolution declaring a housing emergency in the City and County of San Francisco. 

7/10/00. REFERRED FOR ADOPTION Willi! >l I ( c 1MMITTEE REFERENCE AGENDA AT THE NEXT BOARD MEETING 
7/17/00. SEVERED FROM FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA Supervisor Kaufman requested this 
matter be severed so it could be considered separate!) 

7/17/00, REFERRED to Finance and Labor Committee Supervisor Kaufman requested this matter be referred to committee 
Continued to August 23. 2000. 
CONTINUED by the following vote: 
Ayes: 3 - Yee. Bierman. Ammiano 



001280 (Health Emergency Declaration] 

Supervisors Ammiano, Becerril, Katz. Bierman 

Resolution concurring with the findings of the San Francisco Mental Health Board to declare a health 

emergency in the City and County of San Francisco. 

7/10/00. REFERRED FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA AT THE NEXT BOARD Ml 

7/17/00. SEVERED FROM FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA Supervisor Kaufman requested this 

matter be severed so it could be considered separately. 

7/17/00, REFERRED to Finance and Labor Committee Supervisor Kaufman requested this maner be referred to committee 

Heard in Committee Speakers Supervisor Ammiano; Tim Agar. Mental Health Board; Nancy Presson; 
Andrea Leong, Asian Health Task Force. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee. Bierman, Ammiano 

City and County of San Francisco 4 Printed at II: 40 A.\t on 47*1 



Finance and Labor Committee 



Meeting Minutes 



August 9, 2000 



001326 [HIV/AIDS Statistics] 
Supervisor Ammiano 

Hearing to inquire into the latest statistics regarding the HIV/AIDS rates. 
7/17/00, RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Supervisor Ammiano; Supervisor Leno: Dr. Mitchell Katz, Director of 
Health, Department of Public Health; Dr. Tom Coates, Director, AIDS Institute. UCSF; Roma Guy, President, 
Health Commission; Dr. Herminia Palseio; JeffSheehy; Shawn O'Hearn; Michael Petrelis; Hank Wilson; Dr. 
Virginia Cafaro; Homer Hobby, Survive AIDS; Jeff Getty; Patriclk Shaw; Mark Solomon; Ronnie Burk; Dr. 
Stephen Murray; Gilbert Criswell, Queer Nation; Brian Byrnes, Director, Prevention Services, S. F. AIDS 
Foundation; Tate Swindell, ACTUP; Rev. Yvette Plunder, Arc of Refuge; Paul Bodner; Tim Wohlfeiler; Betty 
Best; Larry Edmond; A. Toni Young, S. F. Planning Council. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



ADJOURNMENT 

The meeting adjourned at 1:40 p.m. 



City and County of San Francisco 



Printed at 11:40 AM on 8/14/00 



5.^ 



[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



CITY AND COUNTY 




OF £AN FRANCISCO 



.BOARD OF SUPERVISORS 
BUDGET ANALYST 



1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 

FAX (415) 252-0461 T\r\rxi .» ._ 

DOCUMENTS DEPT. 



August 3, 2000 
TO: ^Finance and Labor Committee 

FROM: ^Budget Analyst 
SUBJECT: -August 9, 2000 Finance and Labor Committee Meeting 



AUG - 8 2000 

SAN FRANCISCO 
p UBL!C LIBRARY 



Item 1 - File 00-1337 

Department: 

Item: 



Description: 



Department of Public Health (DPH) 

Ordinance amending Part II, Chapter V, of the San Francisco 
Municipal Code (Health Code) by amending Section 128 
thereof, to fix patient rates for services furnished by the 
Department of Public Health, retroactively to July 1, 2000. 

The San Francisco Municipal Code requires the City to 
approve an ordinance each year fixing patient rates for 
services provided by Department of Public Health (DPH). 
DPH reviews annually its charges for services and makes 
adjustments, when appropriate, to provide for a full recovery 
of costs. The proposed ordinance would set DPH patient 
rates for San Francisco General Hospital. Laguna Honda 
Hospital, Primary Care Clinics, Community Mental Health 
Services and Community Substance Abuse Services. The 
proposed rates would be retroactive to July 1, 2000. 

Attachment I, provided by the DPH, compares the FY 1999- 
2000 patient rates with the proposed FY 2000-01 patient 
rates. Following a cost analysis, local rate surveys, and a 
review of reimbursement rates. DPH has recommended rate 



Memo to Finance and Labor Commitl 

August 9, 2000 Finance and Labor Committee Meeting 

in< : r some services and has recommended the 

establishment of some oew rates to ensure that the patient 
rates recover DPH costs As -hewn m Attachment I. the 
proposed rate changes, as recommended by DPH, range from 
no change to a 92 percent increase. On average, all fees 
would increase by 14 percent, according to Ms. okubo. 

Ms < >kubo states that, while four of the rates are proposed to 
increase by at least 50 percent, those proposed increases are 
based on what other Bay Ana health care institutions 
charge for similar sen i 



Comments: 



1. According to Ms. Okubo, the Department's FY 2000-01 
budget includes $28,981,588 m total patient revenues based 
on the patient rates shown in Attachment I. which is 
$723 796 or 2.5 percent r than the FY 1999-2000 

revenue- 92. 



Ms. Okubo states that DPffs FY 2000-01 budget is based on 
projected reimbursement from private insurance at the 
proposed patient rate.- contained in this ordinance. DPH has 
been billing for health care services at the increased rates 
shown m Attachment I since July 1. 2000. according I 
Okubo. 

2. Ms. Okubo it the proposed patient rates (a) are 
comparable to the rates charged by other Bay Area health 
care institutions, (b) achieve consistency within DPH and the 
Community Health Network, and (ci provide for the recovery 
of DPH a 

3. According to Ms. Okubo. this ordinance was not submitted 
to the Board of Supervisors prior to the approval of the DPH 
FY ^000-01 budget because the survey of Bay Area rates 
needed to be revised in late June. Additionally. Ms. Okubo 

that the Department had to prepare for a number of 
hearings in June, and that delayed finalization of the Bay 
Area rate survev. 



Recommendation: Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



YPEOF SERVICE 



OMMUNITY HEALTH NETWORK 



DEPARTMENT OF PUBLIC HEALTH 

PROPOSED PATIENT RATES 

FY 00-01 



UNITS OF 
SERVICE 



CURRENT 

RATE 
FY 99-00 



Attachment I 
Page 1 of 6 



PROPOSED 

RATE 

FY 00-01 



PERCENT 
CHANGE 



an Francisco General Hospital 
Supplies & Drugs 



Unit 



Special Price List 



n-Patient Care 




Medical Surgical 


Day 


Intensive Care 


Day 


Intensive Care - Trauma 


Day 


Coronary Care 


Day 


Chest-Pulmonary 


Day 


Stepdown Units 


Day 


Pediatrics 


Day 


Obstetrics 


Day 


Nursery 




New Born 


Day 


Observation/Well Baby 


Day 


Semi-Intensive Care 


Day 


Intensive Care 


Day 


Labor/Delivery - 6G 


Day 


Labor/Delivery Hours of Stay 


Hour 


Psychiatric Inpatient 


Day 


Psychiatric Forensic Inpatient - 7L 


Day 


AIDS Unit-5A 


Day 


Security Unit - 7D 


Day 


Skilled Nursing Facility 


Day 


Mental Health Rehab. SNF 


Day 



1,130 


1,350 


19% 


2,600 


2,950 


13% 


3,300 


3,300 ' 


0% 


2,600 


2,950 


13% 


2,600 


2,950 


13% 


1,700 


2,000 


18% 


1,130 


1.250 


19% 


1,130 


1.350 


19% 


750 


850 


13% 


1,130 


1,350 


19% 


1,700 


2,000 


18% 


2.600 


2,950 


13% 


1,130 


1,350 


19% 


65 


70 


8% 


1,130 


1,350 


19% 


1,130 


1,350 


19% 


1,130 


1,350 


19% 


1,130 


1,350 


19% 


450 


500 


11% 


450 


500 


11% 



Surgical Services 

Minor Surgery Pre-Op Holding Room 
Minor Surgery I (Come & Go) 



Minor Surgery II 

Major Surgery Pre-Op Holding 
Major Surgery I 



Room 

1/4 Hour 

1/2 Hour 

3/4 Hour 

Full 1 Hour 

Ea. Add'l 1/4 Hr. 

1st Hour 

Ea. Add'l 1/2 Hr. 

Room 

1 st Hour 

Add'l 1/2 Hour 



137 


155 


13% 


195 


220 


13% 


388 


440 


13% 


583 


660 


13% 


776 


870 


12% 


195 


220 


13% 


842 


950 


13% 


420 


470 


12% 


137 


155 


13% 


1,254 


1,400 


12% 


438 


500 


14% 



Attachment I 
Page 2 of 6 



TYPE OF SERVICE 
Major Surgery II 
Major Surgery III 
Extraordinary Surgery 
Surgery (2 Teams) 
Surgery (3 Teams) 
Major Trauma III 
Major Trauma II 
Major Trauma I 
Recovery Room 

Anesthesia 

Laser Treatment 
Therapeutic Abortion 

Trauma Care 

Admitted/Expired 

Treated & Released 

Consultation 

Pediatric - Admitted/Expired 

Pediatric - Treated & Released 

Pediatric - Consultation 



DEPARTMENT OF PUBLIC HEALTH 

PROPOSED PATIENT RATES 

FY 00-01 





CURRENT 


PROPOSED 




UNITS OF 


RATE 


RATE 


PERCENT 


SERVICE 


FY 99-00 


FY 00-01 


CHANGE 


1st Hour 


1.416 


1.600 


13% 


Add'l 1/2 Hour 


452 


550 


22% 


1 st Hour 


1.577 


1.800 


14% 


Add'l 1/2 Hour 


583 


660 


13% 


1 st Hour 


1,779 


2.000 


12% 


Add'l 1/2 Hour 


647 


725 


12% 


Procedure 


2.465 


2.800 


14% 


Add'l 1/2 Hour 


828 


950 


15% 


Procedure 


3.198 


3.600 


13% 


Add'l 1/2 Hour 


1.076 


1.200 


12% 


First Hour 


3.154 


3.154 


0% 


Susequent Hours 


1.166 


1.166 


0% 


First Hour 


2.478 


2.478 ' 


0% 


Susequent Hours 


791 


791 


0% 


First Hour 


1.881 


1.881 


0% 


Susequent Hours 


657 


657 


0% 


1st Hour 


485 


550 


13% 


2nd Add'l Hour 


116 


130 


12% 


3rd Add'l Hour 


73 


80 


10% 


First 1/2 Hour 


385 


440 




Add'l Minute 


12 


15 


25% 


Procedure 


1.272 


1.450 


14% 


Procedure 


210 


250 


19% 



Day 
Day 
Day 
Day 
Day 
Day 



4.500 


4.500 * 


0% 


2.800 


2.800 ' 


0% 


750 


"5: • 


0% 


4.500 


4.50C ' 


0% 


2.800 


2.800 • 


0% 


750 


750 ' 


0% 



Emergency Clinic 
Level I 
Level II 
Level III 
Level IV 
Level V 
Level VI 



Room 
Room 
Room 
Room 
Room 
Room 



77 


9C 


17 


105 


120 




133 


150 




245 


280 




559 


630 




1.328 


1.500 


13% 



^ '&£ Sv _^ie*_00 m *74 



TYPE OF SERVICE 

Non-Critical Observation 

Critical Observation 
Resuscitation 



Attachment I 
Page 3 of 6 



DEPARTMENT OF PUBLIC HEALTH 

PROPOSED PATIENT RATES 

FY 00-01 





CURRENT 


PROPOSED 




UNITS OF 


RATE 


RATE 




PERCENT 


SERVICE 


FY 99-00 


FY 00-01 




CHANGE 


0-2 Hours 


77 




90 


17% 


2-4 Hours 


224 




250 


12% 


4-6 Hours 


384 




430 


12% 


0-2 Hours 


224 




250 


12% 


2-4 Hours 


447 




500 


12% 


4-6 Hours 


664 




750 


13% 




1.328 




1.500 


13% 



General Clinic 




Initial 




E/M Focused Exam 


Visit 


E/M Expanded Exam 


Visit 


E/M Detailed Exam 


Visit 


E/M Comprehensive Exam 


Visit 


E/M Complex Exam 


Visit 


Targeted Case Management 


Visit 


Established Patient 




E/M Brief Exam 


Visit 


E/M Focused Exam 


Visit 


E/M Expanded Exam 


Visit 


E/M Detailed Exam 


Visit 


E/M Comprehensive Exam 


Visit 


Consultation 




E/M Focused Consult 


Visit 


E/M Expanded Consult 


Visit 


E/M Detailed Consult 


Visit 


E/M Comprehensive Consult 


Visit 


E/M Complex Consult 


Visit 


Use of Exam Room 


Room 



70 
119 
136 
190 
247 
135 

46 

62 

70 

101 

166 

67 
101 
103 
136 
201 

34 



80 


14% 


140 


18% 


160 


18% 


220 


16% 


280 


13% 


220 


63% 


50 


9% 


72 


16% 


95 


36% 


145 


44% 


220 


33% 


75 


12% 


115 


14% 


115 


12% 


155 


14% 


230 


14% 


40 


18% 



Primary Care 

Initial 

E/M Focused Exam 
E/M Expanded Exam 
E/M Detailed Exam 
E/M Comprehensive Exam 
E/M Complex Exam 
Targeted Case Management 



Visit 
Visit 
Visit 
Visit 
Visit 
Visit 



68 
100 
130 
184 
234 
142 



80 


18% 


110 


10% 


150 


15% 


200 


9% 


300 


28% 


160 


13% 



Attachment I 
Page 4 of 6 



DEPARTMENT OF PUBLIC HEALTH 

PROPOSED PATIENT RATES 

FY 00-01 







CURRENT 




PROPOSED 






UNITS OF 


RATE 




RATE 




PERCENT 


TYPE OF SERVICE 


SERVICE 


FY 99-00 




FY 00-01 




CHANGE 


Established Patient 














E/M Brief Exam 


Visit 




37 




40 


8% 


E/M Focused Exam 


Visrt 




52 




60 


15% 


E/M Expanded Exam 


Visit 




67 




95 


42% 


E/M Detailed Exam 


Visit 




78 




150 


92% 


E/M Comprehensive Exam 


Visit 




157 




180 


15% 



Dental Services 

Initial Complete Exam 

Periodic Exam 

Prophylaxis - Adult 

Prophylaxis - Child 

Extract Single Tooth 

One Surface, Permanent Tooth 



Visit 
Visit 
Visit 
Visit 
Visit 
Visit 



37 
37 
52 
47 
74 
68 



40 


8% 


40 


8% 


55 


6% 


50 


6% 


80 


8% 


70 


3% 



Home Health Services 
Skilled Nursing 
Home Health Aide Services 
Medical Social Services 
Physical Therapy 
Occupational Therapy 
Speech Therapy 



Visit 
Visit 
Visit 
Visit 
Visit 
Visit 



153 
79 

213 
175 
175 

177 



153 


0% 


79 


0% 


213 


0% 


175 


0% 


175 


0% 


177 


0% 



Laguna Honda Hospital 

Regular Hospital Rates 
Acute 

Rehabilitation 
Skilled Nursing Facility 
All Inclusive Rates 
Acute 

Rehabilitation 
Skilled Nursing Facility 



Day 
Day 
Day 

Per Diem 
Per Diem 
Day 



875 


1.050 


20% 


875 


1.050 


20% 


300 


360 


20% 


1,100 


1.320 


20% 


1.100 


1.320 


20% 


350 


420 





TYPE OF SERVICE 



POPULATION HEALTH & PREVENTION 



DEPARTMENT OF PUBLIC HEALTH 

PROPOSED PATIENT RATES 

FY 00-01 



UNITS OF 
SERVICE 



CURRENT 

RATE 
FY 99-00 



Attachment I 
Page 5 of 6 



PROPOSED 

RATE 

FY 00-01 



PERCENT 
CHANGE 



Community Mental Health Services 




24-Hour Service 




Inpatient 


24 Hours 


Skilled Nursing 


24 Hours 


Crisis Residential 


24 Hours 


Residential 


24 Hours 


Day Services 




Rehabilitation 


Full Day 


Intensive 


Full Day 


Intensive (children) 


Half Day 


Crisis Socialization 


Hour 


Crisis Stabilization 


Hour 


Socialization 


Hour 


Outpatient Services 




Case Management Brokerage 


Hour 


Mental Health Services 


Hour 


Medication Support 


Half Hour 


Crisis Intervention 


Hour 



850 


1,350 


59% 


415 


415 


0% 


250 


250 


0% 


125 


125 


0% 


110 


110 


0% 


190 


190 


0% 


200 


200 


0% 


50 


75 


50% 


80 


80 


0% 


30 


30 


0% 


80 


96 


20% 


150 


150 


0% 


120 


120 


0% 


375 


375 


0% 



Community Substance Abuse 

Residential - Detoxification 
Residential - Basic 
Residential - Family 
Residential - Medical Support 
Recovery Home 
Therapeutic Community 
Outpatient (include Detox) 
Methadone Treatment 
Naltrexone Treatment 
Prevention/Intervention 
Day Care - Habilitative 



24 Hours 

24 Hours 

24 Hours 

24 Hours 

24 Hours 

24 Hours 

Per Contract 

Hour 

Per Contract 

Hour 

Per Contract 



84 
81 

135 

200 
70 
80 

108 
26 
45 
50 

108 



87 


4% 


84 


4% 


140 


4% 


207 


4% 


70 


0% 


80 


0% 


108 


0% 


26 


0% 


45 


0% 


52 


4% 


112 


4% 



TYPE OF SERVICE 



DEPARTMENT OF PUBLIC HEALTH 

PROPOSED PATIENT RATES 

FY 00-01 



UNITS OF 
SERVICE 



CURRENT 

RATE 
FY 99-00 



Attacnmenr 1 
Page 6 ol 5~~ 



PROPOSED 

RA T E 

FY 00-01 



PERCENT 
CHANGE 



Records and Statistics 
Birth Record 
Death Record 

Permit - Disposition of Human Remains 

Passport Application Per Application 

Passport Photo Per 2 Photos 

Out-of-County Certificate Per Certificate 

Certificate Embossing Per Embossing 
Death Certificate FAX Filing Fee - Mortuary (Under Contract) 

Per Reviewed Submission Per Submission 

Per Accepted Certificate Per Certificate 

Contract Change Order Per Change Order 

National Adoption Resources Booklet Per Booklet 

Letter of Non-Contagious Disease Per Letter 

Document / Certificate Will-Call Per Document 



Rates Per State of California 
Rates Per State of California 
Rates Per State of California 



Market Rate 



15 
10 

S10 
5 

3 

7 
95 
2 
7 
5 



Market Rate 



15 

10 

S10 

5 

3 

7 

95 

2 

7 
5 



0% 
0% 
0% 
0% 

0% 
0% 
0% 
0% 
0% 
0% 



DEPARTMENT OF PUBLIC HEALTH 



Electronic / Internet Transaction Fee 
Telephone / FAX Transaction Fee 
Expedited Delivery of Documents 

Regular Delivery - U.S. & International 
Same Day - Greater Bay Area 
Same Day - Other California 



Per Transaction 


5 


5 


0% 


Per Transaction 


5 


5 


0% 


Per Delivery 


Market Rate ♦ S5 


Market Rate ♦ S5 


0% 


Per Delivery 


Market Rate ♦ S5 


Market Rate ♦ S5 


0% 


Per Delivery 


Market Rate ♦ S10 


Market Rate* $10 


0% 



ADULT IMMUNIZATION CLINIC 



Vaccines 

Hepatitis A 
Hepatitis B 



Per Injection 
Per Injection 



42 
50 



42 
50 



0% 
0% 



* Contained in Charge Descnption Master in FY 99-00 



L 'BCSV_w*_0O m VZW) 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

Items 2 and 3 - Files 00-1428 and 00-1264 

Department: Rent Arbitration Board (Rent Board) 

Items: File 00-1428 : Ordinance appropriating $388,412 of 

Rent Arbitration Board Special Revenue Funds for 
Salaries, Fringe Benefits, Training and Professional 
Services to improve customer service to the public and 
eliminate work backlog for the Rent Arbitration Board 
of Fiscal Year 2000-01 and placing an additional 
$104,079 on reserve. 

File 00-1264: Ordinance amending the San Francisco 
Administrative Code Chapter 37A "Residential Rent 
Stabilization and Arbitration Fee" by amending 
Sections 37A.2 and 37A.6 to increase the maximum 
annual residential rent ordinance fee from $16 to $19 
per unit for Fiscal Year 2000-01 and to provide that no 
more than $16 per unit may be passed through from 
the landlord to the tenants. 



Amount: 
Source of Funds: 
Description: 



$492,491 

Rent Arbitration Board Special Revenue Fund 

The owner of all residential rental units in the City, 
with the exception of specific non-profit entities, 
residential care facilities, Section 8 housing, Ellis Act 
exempted units and residential units constructed since 
June of 1979, is required under Chapter 37A of the 
Administrative Code to pay an annual Rent 
Stabilization and Arbitration Fee for each unit. The 
fee for each rental unit is calculated annually by 
determining the total projected annual cost of funding 
the Rent Arbitration Board divided by the total 
number of rental units estimated to pay the fee. 
Currently, such an annual fee cannot exceed $16 per 
rental unit. 



The proposed ordinance (File 00-1264) would increase 
the current maximum annual fee for each rental unit 
from $16 to $19 for Fiscal Year 2000-01, a $3 or 18.8 
percent increase. Chapter 37A stipulates that 
residential hotel units pay a fee which is one-half of 
the fee for residential rental units. As a result, under 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

9 



Mi •me i io Finance and Labor Committee 

August 9, 2000 Finance and Labor Commil ;ing 

the proposed ordinance, the annual fee for each 
residential hotel unit would increase from $8 to $9.50 
for Fiscal Year 2000-01, a g 18.8 pel 

increase. 

Chapter 37A currently Btates thai the owners of c 
units (including residential hotel units) may seek 
recovery of the entire Rent Stabilization and 
Arbitration Fee from the tenant in occupancy of the 
residential unit on November 1 st and outlines the 
specific procedures for recovery of these annual fees. 
Under the proposed ordinance (File 1264). the owner of 
the rental unit would be limited to seeking recovery 
from the tenant of up to a maximum of $16. of the 
proposed $19 per unit fee annually The proposed 
ordinance also states that the owner remains liable for 
the full paymenl of the annual fee to the City's Tax 
Collector whether or not the owner seeks any recovery 
or receives any portion of the fee from the tenant 

Therefore, under the proposed ordinance, the annual 
residential fee to be paid by the owner would increase 
from $16 to $19 in FY 2000-01. However, the owner 
would be limited to recovery of the current annual fee 
of $16 from the tenant, such that the owner would be 
responsible for the remaining annual $3 increase per 
unit. All of these annual Rent Board Fees are 
deposited into the Rent Arbitration Board Special 
Revenue Fund. 

The proposed '1 supplemental appropriation 

ordinance (File 00-1428) would be funded with the 
additional revenues received from the proposed fee 
increases deposited into the Rent Arbitration Board 
Special Revenue Fund. Under the proposed 
supplemental appropriation, the Rent Board would 
retain five existing temporary FTE Administrative 
Law Judges for seven months (retroactive to July. 
2000 through January. 2001) to eliminate the Rent 
Board's backlog of hearings. The Rent Board's current 
backlog is approximately 135 cases for hearings. The 
Rent Board also proposes to enter into a personal 
services contract to purchase and install an enhanced 
database system to facilitate web-based access for the 
public and to provide more useful and efficient 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

information for Rent Board staff by reducing the staffs 
dependence on handling paper files. In addition, under 
the proposed supplemental appropriation, the Rent 
Board staff would contract for (1) customer service 
training for those staff that have the greatest client 
contact on the telephone or in-person and (2) Word 98 
training for all staff that would be using the new r 
multi-platform word processing program. The 
requested $104,079 reserve would be for the Rent 
Board to hire up to an additional 2.5 FTE 
Administrative Law Judges, as necessary, to 
accommodate fluctuations in caseloads, to prevent the 
reoccurence of backlogs. 

Budget: Temporary Salaries $242,850 

Administrative Law Judges, $83,263 annually 
(5 FTE Adm. Law Judges for 7 months) 
Fringe Benefits (25% of Temp Salaries) 60,712 
Professional Database Services 80,000 

(1) Customer Service Training-$1,100 

(11 counseling staff x $100 by City College) 

(2) Word 98 Training - $3,750 
(30 staff x $125 per staff) 

Training Total 4.850 

Subtotal $388,412 

Reserved Funds $104.079 

(2.5 FTE Adm. Law Judges x 6 months) 

Total Supplemental Appropriation $492,491 

Comments: 1. The proposed ordinance would increase the Rent 

Board fees from $16 to $19 for only one year (FY 2000- 
01), because according to Mr. Joe Grubb, Executive 
Director of the Rent Board, it is unclear how many 
new tenant or landlord filings or additional w f ork 
responsibility of the Rent Board will occur after the 
current year. For example, Mr. Grubb advises that 
there is currently an Initiative Ordinance on the 
November 7, 2000 ballot that would virtually 
eliminate the existing capital improvement cost 
passthrough filings, retroactive to April 10, 2000. 
Under the existing capital improvement cost 
passthrough filings, the owner of a building can 
petition the Rent Board to amortize the cost of major 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance and Labor ( lommittee 

Augusl 9, 2000 Finance and Labor Committee Meeting 



capital improvements and passthrough such cos- 
the tenants of the building. If this Initiative Ordinance 
is approved, Mr. Grubb advises thai it may materially 
reduce the Rent Boards workload, -ince currently 
capital improvement passthrough filings represenl 
approximately one-third of all filings received by the 
Rent Board. However. Mr. Grubb cautions that, if the 
proposed Initiative Ordinance is approved, the 
landlord community is likely to (1) seek injunctive 
relief from the courts, (2) file a lawsuit over the 
passage of this Initiative Ordinance, and/or (3) 
increase the number of petitions submitted to the Rent 
Board for passthroughs to tenants for "\vner operating 
and maintenai re Mr <>rubb advises 

that it is unclear what the vrorkload will be for the 
lent Board in future years 

2 Mr. Grubb therefore advises that during FY 2000- 
01, the Rent Board will reexamine the Rent Board's 
workload and filings, as well as the outcome of the 
November election and. if necessary, req 
additional changes to the annual Rent Board Fee or 
alternatively permit the Fee to return to S16 annually. 

ader the proposed ordinance, owners would only 
be able to recover $16 of the proposed $19 annual fee 
per rental unit from their tenants. Mr. Grubb advises 
that this provision is proposed because over the last 

wars, the number of landlord petitions has 
increased significantly, from 410 in 1998-99 to 618 in 
1999-2000, an increase of 208. or 50.7 percent. During 
this same period of time, tenant petitions increased by 
13.7 percent from 791 in FY 1998-99 to 899 in FY 
1999-2000. As a result. Mr. Grubb notes that the 
landlord community (i.e.. the Coalition for Better 
Housing and the San Francisco Apartment 
Association) agreed to pay the additional S3 fee 
increase for FY 2000-01. 

4. Mr. Grubb advises that he did not include the 
proposed $19 one-time annual fee and the subject 
supplemental appropriation request in the Rent 
Board's FY 2000-01 budget request because neither 
the tenant nor the landlord community had agreed to 
an increase in the Rent Board fees to pay for the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



proposed additional services. According to Mr. Grubb, 
in mid to late June of 2000, the landlord community, 
as noted above, agreed to the proposed $3 one-time fee 
increase to pay for the proposed additional services. 

5. Mr. Grubb advises that the Rent Stabilization and 
Arbitration Fee was last increased from $10 to $16, a 
60 percent increase, in June of 1999, approximately 
one year ago. The previous Fee increase occurred in 
1993, when fees increased from $8 to $10, a 25 percent 
increase. 

6. According to Mr. Matthew Hymel of the Controller's 
Office, there are approximately 184,000 residential 
rental units, including the residential hotel rental 
units in the City, that are subject to the Rent 
Stabilization and Arbitration Fee. Mr. Hymel states 
that in FY 1999-2000 the Rent Board received 
approximately $2,950,000 at the current $16 annual 
fee. Under the proposed $19 annual fee, and assuming 
the 184,000 rental units remain fairly constant, the 
Rent Board should realize approximately $3,500,000. 

7. As noted above, the proposed supplemental 
appropriation requests appropriation of $388,412, in 
addition to placing an additional $104,079 on reserve 
for 2.5 FTE Administrative Law Judges for six 
months, for a total supplemental appropriation 
request of $492,491. However, the proposed ordinance 
does not specifically state this total amount of 
$492,491. The Budget Analyst recommends that the 
Controller's reserve of $104,079 be deleted. If the Rent 
Board requires additional staffing, the Department 
should request the necessary supplemental 
appropriation at that time. 

8. Mr. Grubb reports that prior to obtaining approval 
of the Board of Supervisors, he has retained four 
existing temporary Administrative Law Judge 
positions at the Rent Board since July 1, 2000, which 
are the subject of the proposed supplemental 
appropriation, in order to address the Rent Board's 
backlog of cases that need to be scheduled for 
hearings. The Budget Analyst therefore notes that the 
proposed supplemental appropriation should be 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

13 



Memo to Finance and Labor Commute.- 

August 9, 2000 Finance and Labor Committee Meeting 



amended to provide retroactive approval of the 
proposed funds. Mr. Grubb advises that, as of August 
1, 2000, there was still a backlog of approximately 135 
cases for hearings. Based on an average workload of 
approximately \2 hearings per month for each of the 
four existing temporary Administrative Law Judges, 
the current backlog of 135 hearings would be 
completed by late-October of 2000. 

Mr. Grubb reports that alter the hearings, it typically 
takes approximately two additional months for the 
Administrative Law Judges to complete their written 
reports, and to review and respond to any appeals. 
This requirement would therefore extend the four 
Administrative Law Judges workload through late- 
December, 2000. Mr. Grubb advises that these 
temporary employees would also qualify for sick leave 
and accrued paid vacation time, which would extend 
these employees on the Rent Board payroll through 
approximately late January of 2001. 

Although the Rent Board's present requirement is four 
additional 8176 Administrative Law Judge positions, 
the Budget Analyst, however, notes that the proposed 
supplemental appropriation would actually fund five, 
not four, 817G Administrative Law Judge positions 
from July 1. 2000 through the end of January of 2001. 
Therefore, the Budget Analyst recommends reducing 
the proposed supplemental appropriation to reflect the 
need for four. rather than five. temporary 
Administrative Law Judges for this seven month 
period, as follows: 









Budget Analyst 




Amount in 


Amount 


Recommended 


Funding L'ses 


Supplemental 


Recommended 


Reductions 


Temporary Salaries 


$242,850 


$194,280 


$48,570 


Fringe Benefits 


60.712 


48.569 


12.143 


Training 


4.850 


4.850 





Professional Services 


80.000 


80.000 





Total 


$388,412 


$327,699 


$60,713 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

14 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

Recommendations: 1. Amend the proposed supplemental appropriation 

ordinance (File 00-1428) to delete reference to the 
Controller's reserve of $104,079, as discussed in 
Comment No. 7. 

2. Amend the proposed supplemental appropriation 
ordinance (File 00-1428) to reduce the request from 
$388,412 to $327,699, a savings of $60,713, to reflect 
the elimination of one temporary Administrative Law- 
Judge position for seven months, as discussed in 
Comment No. 8. 

3. Amend the proposed supplemental appropriation 
ordinance (File 00-1428) to provide retroactive 
approval of these funds, since the four temporary 
employees have been retained since July 1, 2000 
without prior approval of the Board of Supervisors. 

4. Approval of the proposed ordinance (File 00-1428), 
as amended, and approval of the proposed ordinance 
(File 00-1264) are policy matters for the Board of 
Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance and Labor Commit I 

August 9, 2000 Finance and Labor Committee Meeting 

Item 4 - File 00-1272 

Item: Ordinance (a) amending the San Francisco 

Administrative Code by adding Chapter 12N, 
encompassing Sections 12N.1 to 12N.13, to provide that a 
prescribed minimum level of compensation be paid to 
employees of private contractors, including nonprofit and 
for-profit contractors, providing Bervices to the City and 
County, to employees of their subcontractors, and to 
employees of tenants and subtenants on Airport property 
and their subcontractors; and (b) amending Chapter 70 of 
the San Francisco Administrative Code by adding Section 
Toll to provide thai employees of the In-Home 
Supportive Services Public Authority lie paid the specified 
minimum compensation. 

Description: The proposed ordinance would amend the Administrative 

le to require that private contractors and certain 
public entities 1 which have service contrails with the 
City, including then- subcontractors; private firms which 
have agreements with the Airport for the use of real 
property, which includes leases, concession agreenv 
franchise agreements or easement agreements, and then- 
subtenant- and contractors; and the In-Home Supportive 
Services (IHSS) Public Authority provide employees with 
the following: 

• Minimum compensation equal to an hourly wage of 
$9.00 per hour, effective 30 days from the approval of 
the ordinance; 

• Compensated time off. paid at the minimum 
compensation level, equal to 12 days per year for 
fulltime workers: and 

• Uncompensated time off equal to 10 days per year for 
fulltime workers. 

After 12 months, and prior to 18 months, from the 
effective date of the proposed ordinance, the hourly wage 
would be increased by $1.00 per hour to $10.00 per hour 
for effected employees. For each of the 3 years after the 
minimum compensation is increased to $10.00 per hour, 



1 "Public entity" would include any public entity whose jurisdictional boundaries are the same as the 
City, such as the San Francisco Unified School District and the Community College District. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

16 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



the minimum compensation level shall be increased by 2.5 
percent. Increasing the annual minimum compensation 
by 2.5 percent would result in a minimum compensation 
of $10.25 per hour in the first year, $10.51 per hour in the 
second year, and $10.77 per hour in the third year. 
According to the City Attorney, no further adjustment 
would be made in the minimum compensation level after 
the third year adjustment of 2.5 percent. 

The proposed ordinance states that the Controller, the 
Mayor's Budget Office, and the Budget Analyst would 
issue an annual Joint Report, in accordance with existing 
Administrative Code Section 3.6, 2 to determine if the City 
has sufficient funds to pay the anticipated costs of 
increasing the minimum compensation to $10.00 per 
hour. According to the ordinance, "sufficient funds" shall 
mean that the City will not be required to reduce services 
in order to pay the anticipated costs of the adjustment. 
The ordinance states that nonprofit service contractors 
and public entities would not be required to pay the 
minimum compensation of $10.00 per hour if the Joint 
Report determines that the City does not have sufficient 
funds. The nonprofit contractors and public entities 
would only be required to increase the minimum 
compensation by 2.5 percent in the following three years, 
as noted above, if the Joint Report had determined that 
the City had sufficient funds to increase the minimum 
compensation to $10.00 per hour. Only nonprofit 
contractors and public entities would be exempted from 
the $10.00 minimum compensation requirement if the 
Joint Report finds that the City does not have sufficient 
funds, and for-profit contractors and Airport property 
agreements would continue to be covered by the minimum 
compensation requirement. 

The proposed ordinance would apply to private 
contractors with 20 or more employees that have service 
contracts with the City for an amount of $25,000 or 
greater. According to the City Attorney, the number of 
employees of parent and subsidiary organizations of the 



2 Administrative Code Section 3.6 provides that the Mayor, the Controller, and the Budget Analyst 
shall prepare a three-year estimated summary budget each year following adoption of the annual 
budget bv the Board of Supervisors. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance and Labor Committee 

Augusi 9, 2000 Finance and Labor Committee Meeting 



nonprofit and for-profit contractors would be included in 
the count of employees. The proposed minimum 
compensation requirement applies to private contra' I 
which provide services to the City and excludes (a) 
contracts for the purchase or lease of goods; (b) 
contractors who entered into their current service 
eements with the City prior to the effective date of the 
proposed ordinance or who responded to Invitations to Bid 
or Request for Proposal packages prior to the infective 
date of the proposed ordinance; (c) contractors require 

prevailing wage' i I) agreements with a public 

entity whose jurisdictional boundaries are not 
coterminous with the City (e) agreements resulting from 
the settlement of legal proceedings; and <fi agreements for 
the investment or management of trusl assets if 
compliance would violate the fiduciary duties of the 
nsible officials overseeing the trust. 

The proposed ordinance specifies that service agreerm 
involving the expenditure by the City of grant or special 
funds, such as Federal Community Development Block 
Grant funds, would be excluded if (a) application of the 
minimum compensation ordinance would violate or be 
inconsistent with the terms or conditions of the applicable 
grant agreement, and/or (b) if General Fund monies 
would be required to supplement funding to maintain 
services presently paid for by grants or special funds. 

Employees of service contractors noted above who work at 
least 4 hours per pay period on a City contract would be 
covered by the proposed ordinance. According to the City 
Attorney, a pay period is whatever period of time each 
contractor sets and can vary from contractor to contractor. 
Service contractor employees who work on City contracts 
outside the geographic boundaries of or real property 
owned by San Francisco would be covered if they worked 
at least 10 hours in a pay period. Employees of service 
contractors would be excluded if they are (a) less than 18 
years of age. employed as after-school or summer 



3 According to Chapter 6 of the Administrative Code, contractors performing public work or 
improvement projects for the City are required to pay the highest prevailing wage rate to then- 
employees as determined by the Board of Supervisors. Prevailing wages generally apply to all 
construction contracts and in FY 1999-2000 were extended to all janitorial contracts. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

18 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

employees and claimed as dependents for Federal income 
tax purposes; (b) employed as a trainee in a bona fide 
training program consistent with Federal law; or (c) 
disabled and covered by a current sub-minimum wage 
certificate issued by the U.S. Department of Labor. 

The proposed ordinance would also apply to private firms 
that that hold leases, concession agreements, franchise 
agreements, and easement agreements with the Airport 
for more than 29 days in a calendar year, including their 
subtenants and subcontractors. Employees of Airport 
tenants, including ^heir subtenants and contractors, 
would be covered by the minimum compensation 
ordinance if they work 10 hours or more per pay period at 
the Aii-port. 

IHSS workers employed by the IHSS Public Authority 
would also be covered by the proposed ordinance. 

Fiscal Impact: The proposed minimum compensation ordinance would 

result in increased costs to the City due to increased 
service contract costs for both nonprofit and for-profit 
firms and possibly, due to decreased revenues from 
Airport property agreements if the proposed ordinance 
results in lower bids for such agreements. 

The percentage of increased nonprofit costs resulting from 
the implementation of the minimum compensation 
ordinance which the City would pay would be a policy 
decision of the Board of Supervisors. As noted previously, 
the proposed ordinance provides that nonprofit 
contractors and public entities would be exempted from 
the $10.00 per hour minimum compensation requirement 
if the Joint Report determines that the City does not have 
sufficient funds to pay the anticipated costs of the 
adjustment. 

The City would incur increased costs from for-profit 
service contracts, although the percentage of such costs 
that the contractor would pass through to the City is 
uncertain. Two research studies, by the Urban Institute 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

19 



Memo to Finance and Labor < !ommittee 

August 9, 2000 Finance and Labor Committee M< 



of San Francisco State University (SFSU) 4 and by Dr. 
Michael Reich of the University of California, Berkeley 
(UC Berkeley), estima rent amounts of increased 

costs which for-profit sei tors would pass 

through to the City. Both issumed that the City 

would make a policy decision to pay 100 percent of the 
increased costs to nonprofit service contractors. UC 
Berkeley assumed that for-profit contractors would absorb 
most of the increased costs resulting from the 
implementation of a minimum compensation ordinance 
According to Dr Michael Reich of UC Berkeley, based 
upon other cities' experience with minimum compensation 
ordinances, no more than one-third of the for-profit 
contractors increased uld be passed through to 

the City. SFSU assumed that small for-profit contra* I 
(with 50 or less employees) would pass through 100 
percent of the in< : to the City and that large 

for-profit contractors (with more than 50 employees) 
would pass through To percent of the increased costs to 
the City Neither study estimated the fiscal impact to the 
City of increased costs to private firms with Airport 
property agreements. The UC Berkeley study stated that 
the impact to the City of increased costs for private firms 
with Airport property agreements would be minimal. The 
SFSU study, however, stated that such private firms 
would negotiate lower property agreement payments upon 
the renewal of these property agreements due to their 
higher anticipated wage rates. 

Both studies agreed that employers would have increased 
costs from indirect as well as direct wage increases. 
Indirect wage increases, or "wage push", would result 
from the pressure to increase wages for other low-paid 
employees not working on City contracts and for workers 
earning $1.00 to S2.00 per hour more than the minimum 
compensation. 

Because City service contracts expire on different dates, 
increased costs to the City would be phased in over a 
period of time. 



4 SFSU was commissioned by the Living Wage Task Force, which was established by the Board of 
Supervisors in 1998, to study the effects of increasing the minimum compensation level for City 
service contractors and leaseholders. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

20 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



Cost Estimates: Cost estimates of S9.00 per hour minimum 

compensation in the first year of the proposed 
ordinance. 

In FY 2000-2001 the Board of Supervisors approved 
$7,600,000 in General Fund funds to provide a 3 percent 
cost of living adjustment (COLA) for nonprofit service 
contractors to increase wages, with the first priority given 
to those employees earning less than $9.00 per hour, in 
accordance with the Annual Appropriation Ordinance. 
The Board of Supervisors also approved a $4,100,000 
General Fund allocation in the DHS budget to increase 
childcare workers' wages. According to the four City 
General Fund Departments which have the largest 
portion of nonprofit service contracts funded by General 
Fund monies (Department of Public Health, Department 
of Human Services, Sheriffs Department, and the 
Department of Adult and Aging Services), the FY 2000-01 
$7,600,000 COLA and S4, 100,000 increase for childcare 
workers' wages (for a total of $11,700,000) would probably 
be sufficient to cover the cost of a $9.00 per hour 
minimum compensation. Each of the four City 
Departments states that the actual cost of increasing the 
minimum compensation to $9.00 per hour would not be 
known until all of the service contracts were negotiated. 
Based on the information provided by these Departments, 
the City would not have additional costs beyond the 
$11,700,000 in FY 2000-01 to implement a $9.00 per hour 
minimum compensation for nonprofit contractors. 

The Department of Administrative Services Purchaser's 
Office and other City agencies do not track the number of 
employees or their wages and benefits for City service 
contracts. Therefore, estimating the City's increased costs 
resulting from implementation of a minimum 
compensation ordinance requires additional data sources. 
In 1999 SFSU was commissioned by the Living Wage 
Task Force to evaluate the economic impact of a living 
wage (minimum compensation) ordinance on the City. 
Data regarding the City service contractors and Airport 
property agreements, including the number of employees 
and hourly wages, were collected in 1999. The SFSU 
researchers surveyed contractors and Airport tenants, 
BOARD OF SUPERVISORS 
BUDGET ANALYST 
21 



Memo to Finance and Labor Commitl 

August 9, 2000 Finance and Labor Committee Meeting 



and used statistical inference to estimate the number of 
City service contract and Airport property agreement 
employees, and their current wages and benefits. The 
SFSU study was based upon a proposed living wage 
ordinance al that time The subject minimum 

compensation ordinance specifically excludes ser 
contracts funded by grant or special funds if City General 
Fund monies would be required to supplement funding to 
maintain services presently paid for by grants or special 
funds. According to Dr. Michael Potepan of SFSU, the 
data used by SFSU to obtain cost estimates of the 
proposed living wage did n-n separate contracts which 
were funded by grants or special funds from contracts 
funded by General Fund monies. Therefore any cost 
estimates provided by SFSI ' would be greater than actual 
General Fund costs that would be incurred under the 
subject ordinance. 

SFSU estimated that approximately 4,771 

contractor employees would receive wage increases if the 
minimum compensation level were $9.00 per hour/' 
According to the SFSI' study, the estimated total direct 
cost to nonprofit and for-] rvice contractors of a 

$9.00 per hour minimum compensation would be 
158.863. which includes the hourly wage increase, 
compensated time off. and employer payroll 
contributions. '• As noted above, the City would probably 
not have additional costs in FY 2000-01 beyond the 
$11,700,000 COLA and wage allowance previously noted, 
resulting from nonprofit contractors implementing a $9.00 
per hour minimum compensation. The amount of 
additional costs to the City in FY 2000-01 resulting from 
for-profit contractors implementing a $9.00 per hour 
minimum compensation is uncertain. Based on the SFSU 
estimate, additional costs to the City could range from a 
low of no more than $2,740,227 to a high of approximately 
$5,098,823 depending on the percentage of increased costs 
absorbed by the for-profit contractors and the percentage 
of costs passed through to the City by the for-profit 



6 "The Living Wage in San Francisco: Analysis of Economic Impact. Administrative and Policy 
Issues", a San Francisco Urban Institute Report. March 2000 

G SFSU assumed that employer payroll contributions would include T.S2 percent for Social Security 
and Medicare. 3.5 percent for Workers' Compensation, and 1.5 percent for City payroll tax. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



contractors. 7 Total estimated increased costs to General 
Fund service contractors under the subject minimum 
compensation ordinance would be less than the SFSU cost 
estimates because SFSU included service contractors 
funded by grant and special funds which are excluded 
under the proposed ordinance. Additionally, janitorial 
service contracts, which were included in the SFSU 
estimates, are now covered under the prevailing wage 
ordinance, and some service contract employees who were 
earning less than $9.00 per hour at the time of the 1999 
SFSU study are now earning more than $9.00 per hour. 

According to the Mr. Steve Kawa of the Mayor's Office, 
additional General Fund costs to the City resulting from 
implementation of the proposed minimum compensation 
ordinance would be funded from the $5,100,000 Wage and 
Health Care Accessibility Reserve included in the FY 
2000-01 budget. 

Cost estimates of $10.00 per hour minimum 
compensation in the second year of the proposed 
ordinance. 

Under the proposed ordinance, after 12 months and prior 
to 18 months from the effective date of the ordinance, the 
hourly wage would be increased by $1.00 per hour to 
$10.00 per hour for affected employees. 

Based on the SFSU estimates, total increased incremental 
costs to nonprofit and for-profit service contractors 
resulting from a $1.00 per hour increase in the minimum 
compensation level from $9.00 to $10.00 per hour would 
be approximately $24,997,107. Total increased 
incremental costs for nonprofit contractors would be 
approximately $18,412,403. The estimate of $18,412,403 
includes the Mayors Budget Office estimate of 
approximately $3,000,000 to increase the wages of 
approximately 7,200 In-Home Supportive Services (IHSS) 
workers from $9.70 per hour to $10.00 per hour. As noted 



7 The low estimate of $2,740,227 is based on the UC Berkeley assumption that for-profit contractors 
would pass through 30 percent of increased costs to the City and the high estimate of $5,098,823 is 
based on the SFSU assumption that for-profit contractors would pass through 70 percent of 
increased costs to the City. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

23 



Memo i" Finance and Labor Commit 

August 'J. 2000 Finance and Labor Committee Meeting 



previously, the SFSU estimates are higher than actual 
costs resulting from the subject ordinance because the 
SFSL estimates include contractors funded by grant or 
special funds which are excluded in the subject ordinance. 
Additionally, the subject ordinance provides that 
nonprofit contractors and public entities would not be 
required to implement the $10.00 per hour minimum 
compensation if the annual .Jnmt Report issued by the 
Controller, the Mayors Budget Office, and the Budget 
Analysl finds that the City does not have sufficient funds 
to pay the anticipated costs of the adjustment 

Based on the SFSU estimates increased costs to the City 
for for-profit contractors could range from a low of no 
more $2,764,999 Obased on 33 percent of increased costs 
passed through to the City by for-profit contractors) to a 
high of $4,874,388 (based on 70 percent of increased costs 
passed through to the City by for-profit contractors). The 
actual increased i be City would be less bee;: 

the SFSU estimates include for-profit contractors paid by 
giant or special fund- As previously noted, such 
estimates of costs provided by SFSU do not different 
funding sources. Therefore, the estimated General Fund 
costs would be less. 

The Budget Analyst notes that the increased General 
Fund costs resulting from increasing the minimum 
compensation from $9.00 to S10.00 per hour cannot be 
accurately determined until data is available on the 
actual cost of implementing the $9.00 per hour minimum 
compensation standard. According to Mr Matthew 
Hymel. Chief Assistant Controller, informal estimates of 
the actual General Fund cost of increasing minimum 
compensation from $9.00 to $10.00 per hour indicate that 
actual General Fund costs would be less than the SFSU 
estimates. 



Administration and 
Enforcement of 
the Ordinance: 



The proposed ordinance provides that the Department of 
Administrative Services (DAS) would administer the 
minimum compensation ordinance and would be 
responsible for: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

24 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



• Establishing guidelines or rules for the administration 
of the minimum compensation ordinance. Such 
guidelines or rules would include procedures for 
providing administrative hearings requested by 
covered employees to determine if a contractor has 
breached the wage or benefit requirement provided by 
the subject ordinance; and procedures permitting 
contractors to provide confidential payroll information 
to the City for the purpose of monitoring compliance 
with the proposed ordinance. 

• Determining if a contractor is subject to the 
requirements of the ordinance upon request of a City 
department. 

• Reporting annually to the Board of Supervisors on 
compliance with the minimum compensation 
ordinance. 

• Conducting random audits of contractors to determine 
compliance with the minimum compensation 
ordinance. The proposed ordinance does not specify if 
such audits would be conducted by in-house staff or by 
an outside consultant. 

DAS would be responsible for waiving the subject 
ordinance in some circumstances. Such waivers would 
apply if the City department entering into the service 
contract certifies that (a) only one contractor is willing to 
enter into the contract or the contractor is a sole source 
supplier of the service; (b) the contract is necessary to 
respond to an emergency situation endangering the public 
health or safety; (c) no qualified responsive bidders or 
prospective vendors comply with the requirements of the 
minimum compensation ordinance and the service or 
project is essential to the City; and (d) the services to be 
purchased are available under a bulk purchasing 
arrangement with Federal, State, or local government 
entities which will substantially reduce the City's costs. 

Additionally, a nonprofit service contractor may seek a 
waiver from the requirements of the proposed ordinance if 
the highest paid managerial position in the organization 
earns a salary which is not more than six times the lowest 
wage paid. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Commit t < - » - 

August 9, 2000 Finance and Labor Committee Meeting 



The General Manager of the Public Utilities Commission 

may waive the requirements of the minimum 
compensation ordinance if a service contractor provides 
services related to the provision of wholesale or bulk 
water, electricity, natural gas, or ancillary services; if the 
purchase of these services can not be practically 
accomplished through the competitive bid process; and if 
the service contractor is not providing direct, ret, til 
services to end users m the City. The minimum 
compensation ordinance may also be waived through a 
collective bargaining agreement 

DAS would be responsible lor investigating claims by 
covered employees that a contractor has breached the 
minimum compensation ordinance. If DAS were to 
determine that the contractor was not in compliance with 
the subject ordinance, then DAS would notify the City 
Department which has the service contract with the 
contractor about the breach of the minimum 
compensation ordinance and the corrective action to be 
taken. If a contractor i^ not in compliance with the 
minimum compensation ordinance, the City has the right 
to ia) charge the contractor an amount equal to the 
difference between the minimum compensation wage and 
the actual wage paid and to withhold that amount from 
any payments due to the contractor; (b) terminate the 
contract; (c) seek reinstatement of any employee 
discharged or otherwise discriminated against unlawfully 
for reporting the contractor's non-compliance with the 
ordinance; and (d) bar the contractor from entering into 
future contracts with the City for a period of three years. 

DAS would be responsible for conducting an 
administrative review hearing if a covered employee has 
alleged a breach of the subject ordinance, and if DAS has 
either determined that a breach has not occurred or has 
not obtained a remedy for the breach within 60 days of 
the complaint. If an administrative review hearing is 
conducted, the hearing officer would be responsible for 
determining if a breach of the ordinance occurred. 
According to DAS. they have not yet determined if the 
hearing officer would be m-house staff or an outside 
consultant. The proposed budget provided by DAS 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

26 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



Comments: 



provides 1.0 FTE in-house hearing officer (see Comment 
1). 

Under the proposed ordinance the covered employee 
would have the right to bring an action against the 
private contractor in Superior Court after the 
administrative hearing is conducted and a decision is 
issued. The proposed ordinance does not authorize any 
awards of costs, expenses, or attorney's fees in favor of or 
against the City. 

1. According to Ms. Rachel Arnstine O'Hara of DAS, 
estimated annual administrative costs for the ordinance 
would be approximately $685,100, which includes 6 new 
staff, rent for office space, equipment, materials and 
supplies, and related costs. 



1.0 FTE Director 


$ 90,000 




1.0 FTE Hearing Officer 


80,000 




2.0 FTE Investigators 


131,000 




1.0 FTE Outreach Worker 


42,000 




1.0 FTE Senior Clerk Typist 


42,000 




Fringe Benefits @ 26 percent 


100,100 




Subtotal, Personnel Costs 




485,100 


Operating Costs 




200,000 


Total 




$685,100 



The Budget Analyst notes that DAS administration costs 
would be subject to appropriation approval by the Mayor 
and the Board of Supervisors. According to Mr. Kawa, the 
Mayor will be working with DAS to submit a proposal for 
administration and enforcement of the proposed 
ordinance using existing personnel to avoid additional 
costs to the City. Mr. Kawa states that if additional staff 
and funding are required, the $5,100,000 Wage and 
Health Care Accessibility Reserve included in the FY 
2000-01 budget could be a potential funding source. Also, 
some General Fund administrative costs may be offset by 
work-order reimbursements using non-General Fund 
monies, such as work-order reimbursements to DAS by 
the Airport. 

2. According to the City Attorney's Office, the estimated 
City Attorney cost of implementing the proposed 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



ordinance would be approximately $250,000 in the first 
year of the ordinance and approximately $150,000 in each 
be subsequent years of the ordinance. According to 
Ms. Paula Jesson of the City Attorney's Office, City 
Attorney costs would include legal services for the 
implementation of the proposed ordinance, such as legal 
services for interpretation of the minimum compensation 
ordinance provisions, setting up of enforcement and 
administrative hearing procedures, resolving issues 
regarding definitions contained in the ordinance, and for 
City departments and the Airport to facilitate negotiation 
and implementation of service contracts and property 
agreements 

3. SFSU estimated that increased direct and indirect costs 
to Airport property agreements resulting from $9.00 per 
hour minimum compensation, covering 6,196 employees, 
would be approximately $30,01 1,820. Such increased costs 
would be phased in because the property agreements 
expire on different dates. Additionally, the actual 
increased costs to Airport tenant- would be less than the 
SFSU estimates because SFSU obtained data regarding 
Airport tenants in August of 1999, and since that time the 
Airport has implemented the Quality Standards Program 
which requires a minimum compensation of $9.00 per 
hour for Airport tenant employees who are engaged in 
safety and security functions. The attached 
memorandum, provided Mr. Jon Baliesteros of the 
Airport, describes the Quality Standards Program. 

As noted previously. SFSU stated that the Airport would 
have decreased revenues resulting from the minimum 
compensation ordinance because leaseholders would 
negotiate lower lease payments upon the renewal of thee 
leases due to higher anticipated wage rates. UC Berkeley 
stated that the impact to the Airport of increased Airport 
leaseholder costs would be minimal. 

4. In summary, the FY 2000-01 budget included 
$7,600,000 for nonprofit contractors to increase wages, 
with the first priority given to those employees earning 
less than $9.00 per hour, and $4,100,000 to increase the 
wages of childcare workers. Therefore, according to the 
four City General Fund departments with the largest 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

28 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 



portion of City service contracts (Department of Public 
Health, Department of Human Services, Sheriffs 
Department, and Department on Aging and Adult 
Services), the City would probably not have additional 
General Fund costs for nonprofit service contracts 
resulting from the implementation of a $9.00 per hour 
minimum compensation. Additionally, the increased costs 
to the City for for-profit contractors is uncertain. Based on 
SFSU estimates, increased costs to the City for for-profit 
contracts could range from a low of no more than 
$2,740,227 (if for-profit contractors pass through 33 
percent of increased costs to the City) to a high of 
$5,098,823 (if for-profit contractors pass through 70 
percent of increased costs to the City). However, the 
actual General Fund costs to the City would be less than 
the SFSU estimates because the SFSU estimates include 
contractors funded by grants and special funds, which are 
excluded by the subject ordinance. 

Under the proposed ordinance, nonprofit contractors and 
public entities would not be required to implement the 
$10.00 per hour minimum compensation if the annual 
Joint Report issued by the Controller, the Mayor's Budget 
Office, and the Budget Analyst finds that the City does 
not have sufficient funds to pay the anticipated costs of 
the adjustment. Additionally, based on the SFSU 
estimates, estimated increased costs to the City could 
range from a low of no more than $2,764,999 (if for-profit 
contractors pass through 33 percent of increased costs to 
the City) to a high of $4,874,888 (if for-profit contractors 
pass through 70 percent of increased costs to the City). 

For each of the 3 years after the minimum compensation 
is increased to $10.00 per hour, the minimum 
compensation level would be increased by 2.5 percent per 
year, for a minimum compensation of $10.25 per hour in 
the first year, $10.51 per hour in the second year, and 
$10.77 per hour in the third year. Increased costs to the 
City resulting from the 2.5 percent minimum 
compensation increase are not known. No further 
adjustment would be made in the minimum compensation 
level after the third year adjustment of 2.5 percent. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

29 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Commit tee Meeting 

As noted above, actual total increased General Fund 
to service contractors and increased General Fund cost- to 
the ('it\ would be less than the SFSU estimates bee 
the SFSU estimates include service contractors fund' 
grant or speciaJ funds that arc excluded under the 
proposed minimum compensation ordinance. 

Additionally, the SFSU estimates are based on 1999 data 
and since that time, janitors, which were included in the 
service contract cost estimates, have been excepted, and 
Borne other employees who were earning less than $9.00 
per hour in 1999 are now earning more than $9.00 per 
hour. 

Increased costs to the City would be phased in over a 
period of time because City Bervice contract- .-xpire on 
different dab 

The DAS estimate of the annual coal to admini.-ter the 
proposed ordinance is approximately *(i85.100. According 
to Mr Kawa. the Mayor will be working with DAS to 
submit a proposal for administration and enforcement of 
the proposed ordinance using existing personnel to avoid 
additional costs to the City. Additionally. such 
expenditures would be subject to appropriation approval 
by the Mayor and the Board of Supervisors and could be 
offset partially by work-order reimbursements using non- 
General Fund monies, such as work-order 
reimbursements to DAS by the Airport. 

The City Attorney's Office estimates that the cost of legal 
services for implementation of the proposed ordinance 
would be approximately S250.000 in the first year of the 
ordinance and $150,000 for each year of the subsequent 
years of the ordinance. 

Recommendation: Approval of the proposed ordinance is a policy matter for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

30 



FROM SFO INTERNATIONAL AVIATION DEVELOPMENT 



Attachment 
Page 1 of 4 



AIRPORT COMMISSION 

SAN FRANCISCO INTERNATIONAL AIRPORT 

CITY AND COUNTY OF SATV FRANCISCO 

INTEROFFICE MEMORANDUM 



TO: Severine Campbell 

FROM: Jon BaUesteros^vZ^ 

SUBJECT: AIRPORT TENANT SALARY LEVELS 



DATE: August 2, 2000 



Attached please find three surveys of retail and food &. beverage employee salaries paid by 
Airport Tenants. 

This survey was conducted prior to the implementation of the Airport's Quality Standards 
Program ("QSP"). Pursuant to the QSP, all Airport tenant employees performing a security 
or safety function must, among other requirements, receive a minimum compensation level 
of $9.00 per hour by October 1, 2000. This level of minimum compensation will increase to 
SI 0.00 per hour on January 1,2001. 

There are a number of airport tenant employees that do not perform a safety ur security 
function and do not fall under the provisions of the QSP. However, based on recent 
discussions with a small number of retailers, the QSP appears to have had a "ratcheting-up" 
effect on salaries throughout the airport These retailers report that because there are a large 
number of entry-level positions offering S9.00 per hour, the retailer must also offer this level 
of compensation in order to attract and retain employees. 



Doc: H. JballatCTosnrcnio to Sevenne Campbell AufJ 



30a 



'ROM SFO INTERNATIONAL A. 

Attachment 

Page 2 of 4 

AIRPORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
SAN FRANCISCO INTERNATIONAL AIRPORT ^M 8 lyjg 

INTEROFFICE MEMORANDUM 



TO: Peter Nardoza DATE: June 4, 1999 

FROM: Bob Rhoades O^ 

SUBJECT: SFOTECH Wage Survey 

At the request of the Director, I spoke with Jeff Seid regarding the wages being paid 
by their various service providers under contract to SFOTECH. The following 
information was provided: 

Type of Work Hourly Wage 

Janitorial $9.50 

Ramp Scrubbing $9.50 

Baggage System Maintenance $12.50 average 

CUTE $12.00 plus 

Gate Management $12.50 - $17.50 

Ramp Tower $12.50 - $17.50 

SFOTECH manages the security checkpoint contract for the airlines. The hourly 
wage is in the $6.50 to $7.00 range. 

cc: John L. Martin V 



30b 



raoM - : : : v r: national aviation develofmeni 



Attachnent 
Page 3 of h 



RETAIL 



Tenant 


Rates per horn* 


Benefits 


Cashier 


Warehouse 


Driver 


1 


S7.00 


S7.50 


No data 
provided 


• Operator pays !4 

medical/dental if associate 


CalStar Retail, 








chooses to participate 


Inc. 
(non-union) 








• Health benefits kicks in after 
90 days 

• 401 K after one vaar 




S6.00-S8.00 


$6.50 - $8.50 


No data 


No data provided 


Aarons' 






provided 




Concessions 










(non-union) 












S6.OO-S10.00 


No data 


No data 


• medical insurance available 


Manila 




provided 


provided 


after three months 


Chocolate 










(non-union) 












$6.14 


$7.00 


$7.25 


• medical 

• dental 


Host - 








• profit sharing 


Merchandise 
(non-union) 








• other benefits 

• Host provides 3.5% 
increases annually on 
emDloyee anniversary date 




•Training 


S8.00 


No data 


• Medical available after six to 




$6.50 




provided 


12 months 


ABC Cigar Co. 


• Clerks 






• Life insurance 


(non-union) 


S6.50 - $9.00 

• Supervisors 
$9.00- $15.00 









FROM EFO INTERNATIONAL K\ 



AttachnePt 
Page 4 of 4 



FOOD AND BEVERAGE 

As provided by Hos t 



Facility 


Position 


Salary range per hour 


Crab Pot and Main Bar Brew 1 
Pubs 


Bartender (hired before 1 1/89) 


$11.25 


Bartender (hired after 11/89) 


$7.70 -$11 00 


All others 


Service Bartender (hired before 
1 1/89) 


511.00 


Service Bartender (hired after 1 1/89) 


$7 53 -$10 75 


Red Carpet and US Airways 
Clubs 


Bartender (hired before 11/89) 


$10.75 


Bartender (hired after 1 1/88) 


$6.83 - $9.75 


All facilities 


Food Server 


S5.80 


Cocktail Server 


$5.80 


Brew Pub Cocktail Server 


$605 


Beertender 


$6.08 -$8.69 


Cook 


$7.67 -$10 95 


Grill Cook 


■ 
$6.85 -$9.79 


Pantry Person 


$6.63 • $9.47 


Sandwichmaker (not hmng now) 


$3.85 


Piz2a Cook 


$7.10- $10.15 


Bar Helper 


S5 84 - $8.34 


Host/Cashier 


$6.92 - $9.89 


i 
Snack Bar Cashier 


$6.58 -$9 40 


Relief Cashier (Beertender breaker! 


$6.58 -$9 40 


j Utility 


$625 -$8.02 


Exoeditor 


$6.76 - $9.65 


Hydraulic Truck operator 


$7.70 -$11 00 


Food Runner/ASK (no flnving) 


$6.37 -$9.10 


: Head Storekeeper (driving) 


$7.38- $10.54 


I Cashroom Attendant 


$7 46 -$10.65 



30d 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

Item 5 - File 00-1299 



Department: 



Administrative Services (DAS) 
Public Works (DPW) 



Item: 



Resolution transferring jurisdiction of real property from 
the Department of Administrative Services to the 
Department of Public Works, identified as Assessor's Bloc 
341, Lot Nos. 13 and 14 and sub-surface area of Cyril 
Magnin Street between Lot Nos. 13 and 14 (Hallidie 
Plaza). 



Location: 

No. of Square Feet: 
Description: 



Hallidie Plaza, located in Assessor's Bloc 341, Lots Nos. 
13 and 14 and sub-surface area of Cyril Magnin Street 
between Lot Nos. 13 and 14, at 5 th and Market Streets 
(see Attachment for map). 

25.067 square feet 

The subject resolution would transfer jurisdiction of 
Hallidie Plaza (Assessor's Bloc 341, Lots Nos. 13 and 14, 
and the area located below Cyril Magnin Street and 
between Lots Nos. 13 and 14) from the Department of 
Administrative Services (DAS) to the Department of 
Public Works (DPW). Hallidie Plaza is a brick-paved area 
located below street-level and is used currently as public 
open space. Part of this property (4.895 square feet) 
located between Lots Nos. 13 and 14. and underneath 
Cyril Magnin Street (see Attachment for map), is leased 
to the San Francisco Convention and Visitors Bureau. In 
addition, the City leases space in Hallidie Plaza to a coffee 
stand owned by Cable Car Coffee (see Comment No. 2). 

According to Mr. John Panieri of the Department of Real 
Estate (DRE), streets and plazas, such as the subject 
property, are normally under the jurisdiction to DPW. Mr. 
Panieri advises that the proposed resolution to transfer 
control of Hallidie Plaza from DAS to DPW would place 
control of the property under the appropriate 
Department. The subject resolution states that the 
proposed transfer would not affect current use of the 
property. In addition. Mr. Panieri states that there would 
be no costs associated with the proposed transfer. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

31 



Memo in Finance and Labor ( '< immil I 

Augusl 9 2000 Finance and Labor Committee Meeting 



( Comments: 



1 According to Mr Panieri, thi 

under the jurisdiction <>l the Department of Real Esi 
which i- now a division of DAS. since the City first 
purchased the majority of the property in 1 1 <* "■ T H 
historically, DPW has maintenance and 

improvements for Hallidie Plaza According to Mr Tom 
Carter of DPW, DPWs Bureau of Stn 
Environmental Services includes Hallidie Plaza in n> 
budget for cleaning ai ep of the Market 

Strei Mr Carter advises that until tin- current 

2000-2001, DAS would work-order fund 
DPW for improvements and mainten Hallidie 

Plaza, such as repaii ind the 

inning with the current Fiscal Year, funding 
uch imp! In I >PWs bu 1{ 

Mr Carter reports that DPW included I i! ' in its 

Fiscal Year 2000-2001 budget to Hallidie 

Plaz ng to Mr Panieri DAS did not include any 

funds for Hallidie Plaza in its FY 2000-2001 I 



Recommendation: 



2. As stated previously, a portion of the subject pro] 
35 square feet of thi total 25,067 square : 

to the San Fran mention and Visitor's Bureau. 

Mr Panieri mention and Visit 

Bureau is housed in a structure huilt beneath Cyril 
Magnin Street The subject lease for this space 
renewed in iring in 

Novi mber of 2002 The Convention and Visitor's Bui 
pays tn the City an annual rent of SI. Mr. Panieri ad\ 
the City leases the sul • for SI per year beca 

the Convention and Visitor's Bureau provides information 
to San Francis re, which is considered to 

be a public service, promoting the general welfare of the 
community. In addition, the City has leased space in 
Hallidie Plaza to a coffee stand owned by Cable Car 
• (1,200 square feet of the total ^".067 square feet) 
since dune of 1998. M. Panieri reports that Cable Car 
Coffee pays to the City $1,500 per month. The five-year 
term of the lease will expire in June of 2003. 

Approve the proposed resolution. 



: In March of 1998. the Board of Supervisors approved a five-year lease with the San Francisco 
Convention and Visitor's Bureau, providing for retroactive authorization so that the lease term 
began in November of 1997 and will expire in November of 2002 (Resolution No. 98-2 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Exhibit A 



Attachment:' 



V 



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p <o K 






> 

Q 
U 



Source: Department of 
Real Estate 



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\ ^k 
















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/& 

/& 


r*) 


> 
O 








^^^ 


^^&^^^Cf*/ 












as-ZS-/ 






PG/-2S- \ 










<x 


* A 





















ty 








«\\ 






V> 








SP£>ZS> \ 


<s\. 




*o 






os z £7 














«> 




t^ 


g 




55 


vS>\ 




i 






ft 


°5 S 




N 








*-+e 


•oU 


\r>\ 










s 






**»\ 










K 






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osae" 




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os^/r 




■<N 



Memo to Finance and Labor Commil 

Augusl 9, 2000 Finance and Labor Committee Meeting 

Items 6 & 7 - Files 00-1342 & 00-1343 



Department: 
Item: 



Amount: 



Source of Funds: 



Description: 



Mayor.- Office of Community Development (MO( JD) 

Item 6, File 00-1342 : Hearing to consider the release of 
reserves in the amount of $90,000 to fund the Lavender 
Youth Resource and Information Centex (LYRIC) under 
the Facility Emergency Relief Pool. 

Item 7, File 00-1343 : Hearing to consider the release of 
rvee in the amounl of $40,000 to fund the Central 
City Hospitality House and the San Francisco Eviction 
Defense Collaborative under the Emergency Shell 

( '.rant Pool. 

Item 6, File 00-1342 : $90,000 

Item 7. File 00-1343 : $40,000 

Item 6. File 00-1342 : 2000 Community Development 
Block Grant Program (CDBG) 

Item 7. File 00-1343 : 2000 Emergency Shelters Grant 
Program (ESGP) 

Item 6. File 00-1342 : 

When the Board of Supervisors approved the 2000 
Community Development Block Grant Program (CDBG) 
in April of 2000 (File 00-0 i.OOO was placed on 

rve under the Facility Emergency Relief Pool pending 
a complete program plan and budget details for the 
Lavender Youth Resource and Information Center 
(LYRIC) facility renovation project. LYRIC has now 
obtained approval from the Planning Department for the 
design of the facility renovations and the Mayor's Office of 
Community Development (MOCD) has submitted budget 
details for the S90.000 project. The CDBG funds will be 
used to improve accessibility and safety at the LYRIC 
facility, which offers a job training and educational 
support program, an after school program, an arts and 
media HIV prevention program, a leadership program 
and a youth talk phone line. LYRIC provides such 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

34 



Memo to Finance and Labor Committee 

August 9. 2000 Finance and Labor Committee Meeting 



services to over 1,100 lesbian, gay, bisexual and 
transgender youth each year. 

Item 7. File 00-1343 : 

When the Board of Supervisors approved the 2000 
Emergency Shelters Grant Program (ESGP) grant of 
$890,000 in April of 2000 (File 00-0486), $113,700 was 
placed on reserve under the Emergency Shelter Grants 
Pool pending a complete program plan and budget details 
for the use of the subject funds. MOCD has now 
submitted budget details for a $15,000 grant to the 
Central City Hospitality House and a $25,000 grant to the 
San Francisco Eviction Defense Collaborative, for a total 
of $40,000 in grant funds. Central City Hospitality House 
provides emergency shelter and case management to 
homeless adult males. The $15,000 grant from MOCD 
will be used to provide shelter services for 20 clients per 
night. The average stay for a client is approximately 43 
nights. 

The San Francisco Eviction Defense Collaborative 
provides emergency legal services to tenants facing 
eviction lawsuits. The $25,000 grant from MOCD will 
fund a new 0.7 FTE Eviction Defense Specialist who will 
focus on assisting residential hotel tenants in the 
Tenderloin and South of Market neighborhoods. The 
Eviction Defense Specialist will assist tenants in 
representing themselves in eviction lawsuit proceedings 
by explaining the legal eviction process and how to file 
legal papers and by preparing tenants for settlement 
conferences and trials. 

Approval of the release of $40,000 of the total $113,700 in 
reserved funds will leave $73,700 in ESGP funds on 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

35 



Memo i" Finance and Labor Committee 
Augusl 9, 2000 Finance and Labor Committei 

Budget: Item 6. File 00-1342 : 



The budget for the proposed release of $90,000 in reserved 
funds from the Facility Emergency Relief Pool is as 
follow 

LYRIC 

Renovation of gar 

Installation of storage space 16,200 

Removal of closet wall 3,2 40 

Installation of railing 18.900 
Installation <>i ae* ntry 

for the 2 nd rnd 3 rd flo 2 1.390 
Installation of programmable card 

acces> system 6,07<> 

Replace main building dram pipe 5.000 

Total Budget hi.oOO 



Item 7. File 00-1343 : 

The budget for the proposed release ol $ 10,000 in reserved 
funds from the Emergency Shelter Grants Pool is as 

follow- 



Central Citv Hospitahtv House 




Client Supplies 


^61 


Laundry Service (Bedding &. Towels) 


3.183 


Janitorial Supplies 


2.000 


Maintenance 




Insurance 


2.034 



Total Budget $15,000 



Eviction Defense Collaborative. Inc. 
Eviction Defense Specialist 

Salaries & Benefits (0.7 FTEi S25.000 



Total Budget S25.000 



Comments: Item 7, File 00-1343: 



1. According to Mr. Jon Pon of MOCD. Central City 
Hospitality House was suffering from financial problems 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

36 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

and a high staff turnover rate when its application for 
grant funds was being considered by the Mayors Office. 
Since then, Mr. Pon advises that technical assistance has 
been provided by staff from the Department of Human 
Services and the Department of Public Health and 
Central City Hospitality House has begun to address its 
staff problems by hiring a new executive director. The 
Board of Directors of Central City Hospitality House has 
also been reformed with new members who are committed 
to addressing the management and fiscal problems. 

2. Mr. Pon reports that the Eviction Defense 
Collaborative was recently established as a separate 
nonprofit 501(c)3 corporation in order to deliver its 
services more effectively and to avoid having to pay the 
ten percent overhead fee to the Tides Center, which had 
been acting as the Eviction Defense Collaborative's fiscal 
agent. Thus the Eviction Defense Collaborative is now 
able to save the $2,500 in administrative fees and use the 
entire grant for direct services. 

Recommendations: Item 6, File 00-1342 : Approve the proposed release of 

S90,000 in reserved funds. 

Item 7. File 00-1343 : Approve the proposed release of 
$40,000 in reserved funds. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

37 



Memo to Finance and Labor ' lommil 

August 9, 2000 Finance and Labor Committee Meeting 



Item 8 - File 00-1305 

Department: 

Item: 



Amount: 
Source of Funds: 

Description: 



Department of Public Health (DP! 1 - 

Hearing to consider the release of $479,769 of funds held 
on reserve for the Department of Public Health for Phase 
II of the Tobacco Prevention Program. 

$479,769 

$1,500,000 in proceeds from a Settlement and 
Consolidation Agreement with the R.J. Reynolds Tobacco 
Company regarding Mangini v. R.J. Reynolds Tobacco 
Company, et .al. 

In 1997 San Francisco, along with 13 other California 
cities .mil countie I a settlement agreement with 

R -l Reynolds Tobacco Company in Maneim i. R.J. 
Reynolds Tobacco Company, et .al. Under the settlement 
agreement, San Francisco received $1 "'00.000 to finance 
education, enforcement, and advertising campaigns 

lurage smoking by minors. In September of 1998 the 
rd of Supervisors appropriated i- 1.500.000 to fund 
media, health education, and enforcement programs and 
placed $553. 105 on reserve (File 98-140). In December of 
1998 the Finance and Labor Committee released $73,636 
of th 15 to fund enforcement services provided by 

the Department of Agriculture, Weights, and Measures 
through a work order to DPH. and continued to reserve 
$479,769 (File 98-2003). 

DPH is requesting release 69 to fund (a) a major 

media campaign aimed at youth to discourage cigarette 
smoking, (b) an evaluation to assess the impact of the 
media campaign on youth behavior, and (c) community- 
based intervention programs to discourage smoking. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

38 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

Budget: A summary budget for the $479,769 in reserved funds is 

as follows: 

Media campaign $122,500 

Evaluation 22,500 

Community based intervention 268,579 

Assistant health educator position 66,190 

Total $479,769 



Comments: 1. According to Ms. Anne Okubo of DPH, Phase I of the 

Tobacco Prevention Program included research 
identifying the type of media messages that would be 
effective in discouraging youth from smoking, and the 
target group of 14 to 17 year olds. During Phase I, the 
Tobacco Prevention Program established an advisory 
committee which developed criteria for reviewing tobacco 
prevention advertisements, reviewed and tested the 
effectiveness of existing advertisements, and selected 4 
existing advertisements and recommended production of 4 
new advertisements for the Tobacco Prevention Program. 
Phase I also included Police Department enforcement of 
tobacco sales ban to minors and City Department of 
Consumer Assurance enforcement of the ban on outdoor 
advertising of tobacco products and self-service tobacco 
vending machines. 

2. According to Ms. Okubo, funds in the amount of 
$122,500 would be used to modify an existing contract 
with O'Rorke Public Relations and Advertising, which 
was selected through a Request for Proposal (RFP), to 
produce television and radio commercials and to pay for 
cable and broadcast television and radio advertising. 
Ms. Okubo states that the total budget for the media 
campaign is $565,325, which includes $442,825 in 
unexpended funds from Phase I of the Tobacco Prevention 
Program and $122,500 in requested funds to be released 
for Phase II. The media budget would include production 
of up to six new commercials ($60,000), use of existing 
commercials produced by the California Department of 
Health Services and other tobacco control programs 
($15,000), 12 weeks of cable television advertising 
($175,000), advertising on broadcast television, including 
free placement in Fox Kids Magazine ($150,000), and 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

39 



Memo to Finance and Labor < lommittee 

August 9, 2000 Finance and Laboi Committee Meeting 



radio advertising ($165,325). Ms. Okubo states that the 
requested funds would fund the media campaign for 
approximated L2 months and that no funds have been 
expended. 

3. Ms. Okubo states that the proposed budget incl 
$22,500 to fund an evaluation of Phase II of the Tobacco 
Prevention Program. DPH would modify an existing 
contract with Polaris Research and Development, which 
was selected through an RFP. to conduct 9 youth f 
groups at a cosl of $2,500 per focus group to tesl the 
drafts of the new television advertisements Ms. Okubo 
states that the requested fund- would fund the evaluation 
for approximately 12 months and thai no fund- have been 
expended 

4. DPH proposes to expend $268,579 of the reque- 
funds for professional service contracts to provide 
community based intervention- Ms. Okubo states that 
-]<:>. 000 of the uld fund 3 community 
capacity building projects that would be designed to 
mobilize community members and agencies to change 
environmental factors promoting unhealthy- behaviors, 
such as tobacco advertising and promotion, and easy 
access to tobacco products by minors. According to M- 
Okubo, DPH will issue RFPs to select contractors for the 
proposed community capacity building projects on August 
21, 2000 and expects to select contractors in mid October 
of 2000. Ms. Okubo advises that $103,579 of the $268,579 
would fund a citywide "tobacco control through the arts" 
project that incorporates the arts as an educational 
medium for youth to impact the public's views regarding 
tobacco use. DPH will issue a Request for Proposal to 
select a contractor for the proposed project on August 21. 
2000 and expects to select a contractor in late October of 
2000. The Budget Analyst recommends continuing to 
reserve $268,579 of the requested $479,769, pending 
selection of contractors and submission of budget details. 

5. According to Ms. Okubo. DPH would use $66,190 for 
10.75 months of 1.0 FTE 2819 Assistant Health Educator 
position ($49,643 for salary - plus $16,547 for fringe 
benefits). Ms. Okubo states that this position was hired 
as an L or Limited Tenure Position in July of 1999, using 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

40 



Memo to Finance and Labor Committee 

August 9, 2000 Finance and Labor Committee Meeting 

Tobacco Settlement funds that were previously 
appropriated by the Board of Supervisors in September of 
1998 (File 98-140). According to Ms. Okubo, none of the 
requested funds have been expended for this position. 

Recommendations: 1. Approve release of $211,190 of the requested $479,769. 

2. Continue to reserve $268,579 of the requested 
$479,769, pending selection of contractors and submission 
of budget details, as noted in Comment 4. 



Harvey M. Rose 



Supervisor Yee 
Supervisor Bierman 
President Ammiano 
Clerk of the Board 
Controller 
Steve Kawa 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

41 



I 

0.26+ 
H» loo 




tfr»ff 



u*y 



City Hall 

Dr. Carlton B. Goodlett Place, Room 244 

San Francisco 94102-4689 

Tel. No. 554-5184 

Fax No. 554-5163 

TDD/TTY No. 544-5227 



.NOTICE OF CANCELLED MEETING 

^FINANCE AND LABOR COMMITTEE 
J3AN FRANCISCO BOARD OF SUPERVISORS 



NOTICE IS HEREBY GIVEN that the meeting of the Finance and Labor Committee 

scheduled for Wednesday, August 16, 2000 at 10:00 a.m., at 1 Dr. Carlton B. Goodlett 

v 

Place, Room 263, City Hall, San Francisco, California, has been cancelled. 



Gloria L. Young, Clerk of the Board 



DOCUMENTS DEPT 

AUG ! h 2C00 

SAN FRANCISCO 
PUBLIC LIBRARY 



Cancelled Meeting Notice/Ad 



FINANCE AND LABOR COMMITTEE 
S.F. BOARD OF SUPERVISORS 

CITY HALL. ROOM 2-W 

I DR CARLTON GOODLETT PLACE 

SA\ FRANCISCO. CA 94102-4689 

IMPORTANT HEARING NOTICE!!: 



41 Libran 

100 Larkin Street Govt Information Center 




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City and County of £an Francisco Main Library 

JYIeeting Minutes 
^Finance and Labor Committee 

Members: Supervisors Leland Yee, Sue Bierman, Tom Ammiano 
Clerk: Mary Red 



[All Committees] 



ion 



Wednesday, August 23, 2000 



10:00 AM 

Regular Meeting 



City Hall, Room 263 



Members Present: Leland Y. Yee, Sue Bierman, Tom Ammiano. 



Meeting Convened 

The meeting convened at 10:13 a.m. 

REGULAR AGENDA 



DOCUMENTS DEPT 

AUG 2 9 2C00 

SAN FRANCISCO 
PUBLIC LIBRARY 



001374 [1660 Mission Proposed Expansion] 
Supervisor Yee 

Hearing to consider the impact of the Department of Building Inspection's proposed expansion of 1660 

Mission Street on staff who will continue to occupy the building, including measures that will be implemented 

to ensure a safe, healthy work environment, sufficient air quality, noise dust abatement, and adequate open 

space. 

7/24/00, RECEIVED AND ASSIGNED to Public Health and Environment Committee. 

8/14/00, TRANSFERRED to Finance and Labor Committee. 

Continued to September 20, 2000. 

CONTINUED. 



001362 [Outreach newspaper| 

Supervisors Leno, Bierman 

Resolution designating the San Francisco Bay Times for outreach advertising services for the City and County 

of San Francisco for the lesbian/gay/transgender community for outreach advertising for FY2000-2001. 

7/24/00, REFERRED FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA AT THE NEXT BOARD MEETING. 

7/31/00, SEVERED FROM FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA. Supervisor Yee requested this matter 

be severed so it could be considered separately. 

7/31/00, REFERRED to Finance and Labor Committee Supervisor Yee requested this matter be referred to committee. 

7/31/00, SUBSTITUTED. Supervisor Leno submitted a substitute resolution bearing new title 

7/31/00, ASSIGNED to Finance and Labor Committee 

Heard in Committee. Speakers: Harvey Rose. Budget Analyst. Mike Hard. Assistant Director. Purchasing: 

Supervisor Leno; Supervisor Ammiano: Kim Corsaro. Editor. S F. Bay Times: Supervisor Yee: Ted l.akey. 

Deputy City Attorney. Amendment of the Whole to include the San Francisco Spectrum as outreach 

advertising service. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 



City and County of San Francisco 



Printed at 11:13 AM on &rtS/00 



Finance and l.ahor ( ommittet 



Wttttmg Minuit\ 



\uKust 23, 2IIDII 



Resolution designating the San Francisco Bay Times and the San Francisco Spectrum for outreach advertising 
services foi the City and County of San Francisco for the lesbian/gay/transgender community for outreach 
advertising for FY2000-2001. 

Continued to Special meeting on August 28, 2000, to go to Board as Committee Report on August 28 
CONTINUED by the follo»in K vote 
Ayes: 3 - Yee, Bierman, Ammiano 



000^85 [Approving a four-year contract with ST. Water Alliance to provide Program Management Services !<>r 
Pl'C Capital Improvement Program| 

Resolution approving the Public I tilities Commission Program Management Sen ices contract h ith the San 
Francisco Water Alliance (Public Utilities Commission) 

Supervisor Ammiano dissenting in committee. 

J 24 00, Rl CEIVED AND ASSIGN] D to Finance and I abor Committee 

1 9 110. CONTINUED Heard in Committee speakers Supers isor Ammiano. Ken Bruce. Budget Analyst's Office. Supervisor Yee. 
Larry Klein. Acting General Manager. Public Utilities Commission (PI ( i. Mike (Juan. Utilities Engineering Bureau. PUC. Harvey Rose. 

Budget Analyst; Victor Macro*, Vice President, pi K I o n a niat km; I J R khr daon, BedNel > . >rp.irjtion. John Klucscncr. Project 
Manager, Bechtel Corporation; led Lakey, Deputy Cit) Attorney Opposed Das id Novogrodsky. Local 21. Jim Bukcr. local 21. Jeff 
Sheeny, Victor Mcnotti. International Forum. Antonio Diaz, P.O.D.E R . ( hns Dais, Mission Aganda. Daja Bowler, Peter Warfield 
Continued to August 2. 2000 

8/2/00, CONTINl IED Heard in Comm i tt e e Speakers Ken Bruce. Budget Analyst's Office. Edward Htncs. Public Utilities Commission- 
Continued to August 23, 2000 

Heard in Committee Speakers Larry Klein. Acting General Manager. Public L tilities Commission: Mathew 
Wong. PUC; Supervisor )ee Halter Johnson. S.F, Labor Council. David Sovogrodskx. Local 2 1 . Jim Buker. 
Local 21 . Jeff Sheehy, Wiley Pierce. Geotope Mapping Company, Jennifer Clarey. S F Tomorrow. Anna 
Damiam. Leslie Harless Bacho. S F Food Bank; Doug Biggs. S. F Conservation Corp.. Darlene Gee. 
Sverdrup Civil, Inc . Valerie Sckweyer, Bechtel (nstrastructure Corp . Joe Gonzalez. Geotechmcal 
Consultants, Inc., Chris Daly, LeamonAbrams Bethtel. Supervisor Ammiano. 
RECOMMENDED by the following \ote: 

Ayes: 2 - Yee. Bierman 

Noes: 1 - Ammiano 



000934 [Reserved Funds. Public Utilities Commission! 

Heanng to consider release of reserved funds. Public Utilities Commission. (File 000272: Ordinance N 
00) in the amount of S505.368 to fund removal of contaminated materials from PUC- Water Department 
bayside property leased to Peninsula Sportsman's Club. (Public Utilities Commission) 
5/17/00. RECEIVED AND ASSIGNED to Finance and Labor Committee 

Heard in Committee Speaker Steven Medben: Public Utilities Commission Release of reserves in the 
amount of $505,368 approved 
APPROVED AND FILED by the following \ote: 
Ayes: 3 - Yee, Bierman. Ammiano 



City and County of San Francisco 



Printed at 11:13 4W on S?£W 



Finance and Labor Committee 



Meeting Minutes 



August 23, 2000 



000741 [Electronic Filing by Lobbyists] 

Ordinance amending Article II of the San Francisco Campaign and Governmental Conduct Code by adding 
Section 2.160 to authorize the Ethics Commission to require electronic filing of lobbyist statements and 
reports. (Ethics Commission) 

(Adds Section 2.160.) 

4/20/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 
7/26/00, SUBSTITUTED. Substituted by Ethics Commission 7/26/00, bearing new title. 
7/26/00, ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Ginny Vida, Ethics Commission; Supervisor Yee. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



000742 [Electronic Filing by Campaign Consultants] 

Ordinance amending Article I of the San Francisco Campaign and Governmental Conduct Code by adding 
Section 1.540 to authorize the Ethics Commission to require electrcnic filing of campaign consultant 
statements and reports. (Ethics Commission) 

(Adds Section 1.540.) 

4/20/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

7/26/00, SUBSTITUTED. Substituted by Ethics Commission 7/26/00, bearing new title. 

7/26/00, ASSIGNED to Finance and Labor Committee. 

Heard in Committee. Speakers: Ginny Vida, Ethics Commission; Supervisor Yee. 
RECOMMENDED by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



001417 [Amendment to Lease of property between CCSF and Kira Mikazon for Pier 33, South (The 
Embarcadero at Bay Street)] 

Ordinance approving fourth amendment to lease agreement with Kira Mikazon and the City and County of 
San Francisco operating by and through the San Francisco Port Commission for Pier 33 South, at Bay Street 
and the Embarcadero, San Francisco, California. (Port) 
8/1/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 
Heard in Committee. Speaker: Harvey Rose, Budget Analyst. 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001482 |Tax Rate Setting - City and County of San Francisco] 

Ordinance providing revenue and levying taxes for City and County purposes and establishing passthrough 
rate for residential tenants pursuant to Chapter 37 of the Administrative Code for the fiscal year ending June 
30, 2001. (Controller) 

8/9/00, RECEIVED AND ASSIGNED to Finance and Labor Committee Department requests this item be calendared at the August 23, 
2000 meeting 

Heard in Committee. Speaker: Han-ey Rose. Budget Analyst 
RECOMMENDED by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



City and County of San Francisco 



Printed at 11:14 AM on 8/25/00 



Finance and Labor Committer Wetting Minute* \mguwt 23, 2999 



001483 [Tax Kate Setting - S.F. Unified School District] 

Ordinance providing revenue and levying laxes lor San Francisco I nil'ied School District purposes for the 
fiscal year ending June 30, 2001. (Controller) 

00, RECEIVED AND ASSIGNED to Finance and I ahor ( lommittee Department requests ihis Hem be calendared al the Auk 

2000 meeting 

Heard in Committee Speaker Harvey Rose, Budget Analyst 
RECOMMENDED by the following vole: 
Ayes: 3 - Yee, Bierman, Ammiano 



001484 [Tax Rate Setting - S.F. ( ommunits ( 'ollegC l)istrict| 

Ordinance providing revenue and levying taxes for San Francisco Community College District purposes for 
the fiscal year ending June 30, 2001 (Controller) 

8/9/00. RECEIVED AND ASSK INI Dtol inanceand I ■bar Committee Department requests this item he calendared at the Auk 
2000 meeting 

Heard in Committee Speaker Harvey Rose, Budget Analyst 
RECOMMENDED by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001485 (Annual Appropriation Ordinance Amendment - \rt ( ciininission| 

Ordinance amending the Annual Appropriation Ordinance lor fiscal scar 2000-01. file Number 000980 
Ordinance Number 180-00, adjusting appropriations to meet the requirements of the Art Commission pursuant 
to Charter Section 16 106. (Controller I 

8/9/00. REC1 W I I' \M> ISSIGNI D to Finance and I ahor Committee Department requests this item be calendared at the August 23. 
2000 meeting 

Heard in Committee Speaker Harvey Rose, Budget tnalyst 

RECOMMENDED by the following vote: 
Ayes: 3 - Yee. Bierman. Ammiano 



001452 |San Francisco's Appropriations Limit for Fiscal Near 2000-01 1 

Resolution establishing the appropriations limit for fiscal year 2000-01 pursuant to California Constitution 

Article XIII B. (Controller) 

8/7/00, RECEIVED AND ASSIGNED to Finance and I abor Committee 

Heard in Committee Speaker Harvey Rose, Budget Analyst 

RECOMMENDED by the following sole: 
Ayes: 3 - Yee. Bierman. Ammiano 



City and County- of San Francisco i Printed at 1 1:14 AM on i.7S/00 



Finance and Labor Committee Meeting Minutes August 23, 2000 



001265 [CEQA Findings - Emporium Site Development] 
Supervisor Yaki 

Resolution affirming certification of the Yerba Buena Redevelopment Project Area Expansion/Emporium Site 
Development Final Supplemental Environmental Impact Report by the Planning and Agency Commissions 
and adopting environmental findings (and a statement of overriding considerations) pursuant to the California 
Environmental Quality Act and State Guidelines in connection with adoption of the Yerba Buena 
Redevelopment Project Area Expansion/Emporium Site Development Project and various other actions 
necessary to implement the project. 

(Final EIR Certification Date: January 13, 2000; companion measure to Files 992234, 992235, 001265, 
001256, 001257, 001258, 001259, 001266, 001267, 001434.) 

Supervisor Yee dissenting in committee. 

7/10/00, ASSIGNED UNDER 30 DAY RULE to Transportation and Land Use Committee, expires on 8/9/2000. 

8/22/00, RECOMMENDED. Heard in committee. Speakers: Emilio Cruze, Director of Economic Development; Bill Carney, 

Redevelopment Agency; Kevin Warner. Senior Development Specialist, Redevelopment Agency; David Jones, Project Developer, Forest 

City; Jim Firth, UFCW Local 101; Walter Johnson, San Francisco Labor Council; H. Brown; Jim Chappell, SPUR; Anita Hill, Yerba 

Buena Alliance; Doug Comstock, Coalition for San Francisco; Jennifer Clary, San Francisco Tomorrow; Michael Levin; Mary Ann 

Miller, San Francisco Tomorrow; Myles Stephens, San Francisco Black Chamber of Commerce; Gary Jenkins; Charles Range; Alan 

Gibson, Budget Analyst Office. 

Revised versions of Attachment A and Exhibit 2 were received and placed in the file. 
8/22/00, REFERRED to Finance and Labor Committee. 

Heard in Committee. Speakers: Julie Brant, Mayor's Office of Economic Development; Lloyd Schaegel, 
Arthur Michel, Market Street Railway; Jim Firth, Local 101; Walter Johnson, S. F. Labor Council; Howard 
Wallace, Local 250; Supervisor Yee, Supervisor Ammiano; Supervisor Bierman. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001267 [Tax Increment Allocation/Financing Agreement - Emporium Site] 
Supervisor Yaki 

Resolution approving and authorizing a Tax Increment Allocation Pledge Agreement between the City and 
County of San Francisco ("City") and the Redevelopment Agency of the City and County of San Francisco 
("Agency"), under which the City agrees to a pledge by the Agency of a portion of the available non-housing 
tax increment generated by the redevelopment of the project site (specifically including Assessor's Block 3705, 
Lots 9, 10, 12, 13, 14, 15, 17, 18, 33, 38, and 43) in favor of Emporium Development, L.L.C. ("Developer"), a 
subsidiary of Forest City Enterprises, in furtherance of the implementation of the Redevelopment Plan 
amendment for the addition of the Emporium Site Area to the Yerba Buena Center Project Area; approving 
and authorizing a financing agreement and covenant to operate ("Financing Agreement") in connection with 
the Development of the Emporium Site Area; approving an allocation of tax increment for affordable housing 
purposes in excess of the minimum amount required under Redevelopment Law; making elections with respect 
to the allocation of tax increment; adopting findings pursuant to the California Environmental Quality Act; and 
adopting findings that the agreement is consistent with the city's General Plan and Eight Priority Policies of 
city Planning Code Section 101.1. 

(Fiscal impact.) 

7/10/00, ASSIGNED UNDER 30 DAY RULE to Transportation and Land Use Committee, expires on 8/9/2000. 

8/1 1/00, TRANSFERRED to Finance and Labor Committee. In conjunction with this matter, File 001265, CEQA findings, will be 

considered by the Finance and Labor Committee on August 23, 2000. 

Heard in Committee. Speakers: Julie Brant, Mayor's Office of Economic Development; Lloyd Schaegel, 
Arthur Michel, Market Street Railway: Jim Firth, Local 101 ; Halter Johnson, S. F. Labor Council, Howard 
Wallace, Local 250; Supervisor Yee. Supervisor Ammiano, Supervisor Bierman 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 

City and County of San Francisco 5 Primed at 1 1:14 AM on 8/25/00 



/ inaitee and Labor Committee Meeting Minutes lUMUMt 23, 200$ 



001385 |Prop J, Contracting out Laundry Servkes| 

Resolution concurring with the Controller's certification thai the laundry services can be performed for the 
Department of Public Health. San FlUCttCO General Hospital by private contractor for a lower cost than 
similar work performed by City and County employees. (Public Health Department) 
7/21/00, RECEIVED AND ASSIGN! Die Fmncc and I ibor Committee 

Heard in Committee Speaker Harvey Rose, Budget Analyst Amended to provide retroactivity 
AMENDED. 

Resolution concurring retroactively wnh the Controller's certification that the laundry services can be 
performed for the Department of Public Health. San Francisco General Hospital by private contractor for a 
lower cost than similar work performed by City and County employees. (Public Health Department) 
Kl ( OMMI M)H> VS nil Mil Din the (Mfewtag vmttt 
Ayes: 3 - Yee, Bierman, Ammiano 



001348 | Prop J, Contracting out Paratrausit Services] 

Resolution concurring retroactively with the Controller's certification that paiatransit services for the Public- 
Transportation Commission can be practically performed by a private contractor at a lower cost than by City 
and County employees (Public transportation commission) 
7/20/00. RECEIVED AND ASsh iNl Dtol iaucc and 1 ibor Committee 
Heard in Committee Speaker Harve) Ruse Budget Analyst Amended to provide retroactivity 

\Mt\DED. 

RECOMMENDED IS UVfl M>ED by the following >ote: 
Ayes: 3 - Yee, Bierman, Ammiano 



001427 |Rclease of Reserved Funds, Fire Department! 

Hearing to consider release of reserved funds. I ire Department, ( 1986 Fire Protection Bond interest earnings. 
File 101-95-61: Ordinance No. 127-96 ). in the amount of S2 1,026 to fund the construction and construction 
management associated with the repair of an Auxiliary Water Supply System (AWSS) leak at Cargo and 
Amador Streets. (Fire Department) 

Heard in Committee Speaker Harvey Rose, Budget Analyst Release of reserved funds in the amount of 
$2 1 .026 approved 

VPPROVED WD FILED by the following \ote: 
Ayes: 3 - Yee. Bierman, Ammiano 



City and Counry of San Francisco 6 Printed at 1 1:14 AM on i.lS/00 






Finance and Labor Committee Meeting Minutes August 23, 2000 



000931 [Purchase of real property from Alberts Trust containing 11,651 sq. ft. as an extension of the Edgehill 
Mountain Open Space for a total cost of $206,000] 
Supervisors Teng, Bierman, Becerril 

Resolution approving and authorizing the acquisition of real property in the Forest Hills area identified as 
Assessor's Block No. 2923, Lot 67, for $206,000 from the Florence G. Alberts and Burton H. Alberts Living 
Trust, for open space purposes and adopting findings pursuant to Planning Code Section 101.1. 

(General Rule Exclusion from Environmental Review) 

(Fiscal impact.) 

5/17/00, RECEIVED AND ASSIGNED to Finance and Labor Committee. 

7/7/00, TRANSFERRED to Housing and Social Policy Committee. 

7/18/00, AMENDED. Heard in Committee. Speakers: Anthony DeLucchi, Director of Property, Real Estate Division, Administrative 

Services Department, Steven Suacci, President, Greater West Portal Neighborhood Association; Stephen Ellis, M.D.; Herbert Runyon, 

Edgehill Neighborhood Association. 

Amended on page 1, line 4, by replacing "5200,000" with "5206,000." Supervisors Bierman and Beceml added as co-sponsors. 

Transferred to the Finance and Labor Committee for fiscal impact consideration. 

7/18/00, RECOMMENDED AS AMENDED. 

7/1 8/00, REFERRED to Finance and Labor Committee. 

Heard in Committee. Speaker: Harvey Rose, Budget Analyst. 
RECOMMENDED by the following vote: 

Ayes: 3 - Yee, Bierman, Ammiano 



001279 [Housing Emergency Declaration) 

Supervisors Ammiano, Becerril, Bierman, Katz 

Resolution declaring a housing emergency in the City and County of San Francisco. 

7/10/00, REFERRED FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA AT THE NEXT BOARD MEETING. 
7/17/00, SEVERED FROM FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA. Supervisor Kaufman requested this 
matter be severed so it could be considered separately. 

7/17/00, REFERRED to Finance and Labor Committee. Supervisor Kaufman requested this matter be referred to committee. 
8/9/00, CONTINUED. Continued to August 23, 2000. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



SPECIAL ORDER - 11:00 A.M. 



City and County of San Francisco 7 Printed at 11:14 AM on &7S/00 



h'inanee and Labor Committee Wetting Minnies ImgtUt 23, 20tt 



001225 [Closing ol Montessori ( hildren's Center] 
Supervisor Ammiano 

Hearing lo inquire into the reasons for the proposed closing by the ("armel ( ompanies of the Montessori 
Children's ( enter, a preschool serving the Park Merced community for 24 years. 
6/26/00, RECEIVED and assk ,si Di,, Finance nd I tber Committee. 

/Irani in Commune Speakers Supervisor Ammiano. Bert Polacci. Carmel Companies; Supervisor Bierman, 
Keviv Boden, Montessori Children's Center iMCC); Judith Ffynn, Uf ' Alberta Rose, S F State College; 
Helen Brown; Pam David. Director, Mayor's Office of Community Development. Susan Wong, Yich Inglis; 
Catherine Dauterman, leather, MCC. Caan Nguyen, Peter Broun, leather \l( c Norman Yee, Wu Yee 
Children's Services, Sunil Wyesinghe, \H '( Kathy Jones-Wright, Andriana Boden. Chris Palamountain, 

Attorney. Child Care law (enter. September Jarrctt. John Robert Flvnn-York. Donna Wheeler, Realtor 
( 'harles Burnard, Nina Halters. Judith Baker. South of Market Chddeare < 'enter, Danielle Rodriguez; Robert 
Pander. Dave Clifford, Garrett Jenkins, Rita Harounian, Kara Chun Dr RuvenJafie, Connie Pascal; 
Phillis Diet;. Supervisor Yee 

CONTINUED TO CXU Of I 111 ( II \IK In the following vote: 
Ayes: 3 - Yee, Bierman. Ammiano 



ADJOURNMENT 

The meeting adjourned at I 00 p m 



City and County of San Francisco S Printed at 1 1 1 4 A W on S.7ZV0 



[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



10-2^4 



CITY AND COUNTY 



ftejoo 




OF SAN FRANCISCO 



^OARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



August 17, 2000 



DOCUMENTS DEPT. 

TO: ^Finance and Labor Committee 

AUG 2 2 2000 

FROM: ^Budget Analyst 

SAN FRANCISCO 
SUBJECT: August 23, 2000 Finance and Labor Committee Meeting PUBLIC LIBRARY 



Item 2 -File 00-1362 



Item: 



Description: 



Resolution designating the San Francisco Bay Times for 
outreach advertising services for the City and County of 
San Francisco for the Lesbian/Gay/Bisexual/Transgender 
community for FY 2000-2001. 

Proposition J, which was approved by the San Francisco 
electorate in November of 1994, provided, in part, for an 
Outreach Advertising Fund to be established for the 
purpose of the City placing "outreach advertising" or 
weekly notices of items pertaining to governmental 
operations in periodicals selected to reflect the diversity in 
race and sexual orientation of the population of the City. 
Outreach advertisements include, but are not limited to, 
information about issues that are being reviewed by the 
Board of Supervisors and directly affecting the public. 
Proposition J requires the City to withhold 10 percent of 
the amounts paid for official advertising and deposit the 
monies in the Outreach Advertising Revenue Fund. 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Comments: 1. Pursuant to Proposition J and in accordance with 

Section 2.81-2(a) of the Administrative Code, the City is 
required to withhold 10 percent of the annual amounts 
paid for the City's Type 1 and Type 2 official advertising 
and to deposit these monies into the Outreach Advertising 
Fund. 

The City's official advertising is divided into two 
categories: 

Type 1 - Advertisements for Two or More Consecutive 
Days : Official advertising which must be published on 
two or more consecutive days, and all official advertising 
which is required to be published in accordance with 
Section 2.103 of the Charter for special meetings of the 
Board of Supervisors and its standing or special 
committees. The Official Newspaper must publish at least 
5 days a week for Type 1 Advertising. 

Type 2 - Advertisements for Single or Non-consecutive 
Days : Official advertising, which must be published one 
time, other than one-time advertising related to special 
meetings for the Board of Supervisors and its standing 
and/or special committees, or more than one time but not 
more than three times per week for a specified number of 
weeks. The Official Newspaper must publish at least 3 
days a week for Type 2 Advertising. 

Mr. Luis Espinoza of the Purchasing Department 
estimates that the FY 2000-2001 cost for the City's Type 1 
($23,860) and Type 2 ($917,670) official advertising would 
total $941,530. Therefore, the estimated amount available 
for outreach advertising is $94,153, or 10 percent of the 
$941,530 total. 

2. According to Mr. Espinoza there is a balance of 
approximately $56,902 in the Outreach Advertising Fund 
as of August 8, 2000. 

3. The San Francisco Bay Times was the only bidder for 
outreach advertising for the lesbian/gay/bisexual/ 
transgender community for FY 2000-01. However, the 
San Francisco Bay Times did not qualify for 
recommendation by the Purchasing Department to be an 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

2 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

outreach advertising newspaper through the bidding 
process because it is not printed in San Francisco and 
because it is printed only once every two weeks rather 
than weekly. Mr. Espinoza advises that Section 2.81-4 of 
the Administrative Code states, "If the Board of 
Supervisors finds that certain neighborhoods are not 
being adequately served by the official newspaper(s) and 
the outreach periodicals, the Board may authorize 
additional advertising in monthly neighborhood 
publications which target certain neighborhoods in San 
Francisco. (Added by Proposition J, 11/8/94)." Mr. Edwin 
Lee, Director of Purchasing at the Department of 
Administrative Services, states in a letter dated May 10, 
2000 to the Clerk of the Board that the Board of 
Supervisors may designate a non-qualifying newspaper to 
provide outreach advertising services to those 
communities who are underserved by the qualifying 
newspapers. 

Recommendation: Approval of the proposed resolution is a policy matter for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Item 3 - File 00-0985 



Note: This item was continued by the Finance and Labor Committee at its 
meeting of August 2, 2000. This report is based on an amended contract 
that was negotiated by the Public Utilities Commission staff and the San 
Francisco Water Alliance subsequent to the Finance and Labor 
Committee's initial hearing on the proposed resolution on July 19, 2000. 
The Budget Analyst notes that the Public Utilities Commission has not, as 
of the writing of this report, formally approved the amended contract. The 
proposed contract, as amended, will be considered by the Public Utilities 
Commission at its meeting of August 22, 2000. 



Department: 



Item: 



Amount: 



Public Utilities Commission (PUC) 

Resolution approving the Public Utilities Commission 
Program Management Services Contract with the San 
Francisco Water Alliance, a joint venture of Bechtel 
Infrastructure Corporation, The Jefferson Company, and 
Sverdrup Civil, Inc. 

Up to $45,000,000 over four years. According to Mr. Michael 
Quan of the PUC, this maximum contract amount comprises 
an estimated (a) $8,000,000 for Contract Year 1, (b) 
$14,000,000 for Contract Year 2, (c) $12,000,000 for Contract 
Year 3, and (d) $11,000,000 for Contract Year 4. 

According to Mr. Manfred Wong of the PUC, the amount of 
$45,000,000 was initially approved by the PUC 
Commissioners on the basis of an estimated cost of 
$15,000,000 for each of three main categories of work to be 
performed by the Contractor over the term of the subject 
contract. Revised estimates for the relative proportions of 
estimated costs of each of these categories of work, based on 
the data contained in Attachment I (provided by the San 
Francisco Water Alliance and the PUC) and summarized 
under "Proposed Contractor Remuneration" below, are as 
follows: 



(1) The Program Management Office, which would provide 
services to structure, direct, and implement the program 
and to train PUC staff, is estimated to cost 
approximately $22,000,000, or approximately 48.9 
percent of the maximum contract cost over the four year 
contract term. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

4 






Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

(2) Project and construction management services and 
technical support services are estimated to cost 
approximately $23,000,000 or approximately 51.1 
percent of the maximum contract cost over the four year 
contract term. 

The Budget Analyst notes that these proportions represent a 
significant change from prior information provided by the 
PUC. Whereas the Program Management Office function 
was initially estimated to be approximately 33 percent of the 
total maximum Contractor remuneration, it is now estimated 
to be approximately 48.9 percent even though the PUC 
retains total program management responsibility and does 
not share that responsibility with the Contractor, as 
originally envisaged. Project and construction management 
services and technical support services, which were initially 
estimated to be approximately 67 percent of the total 
maximum Contractor remuneration, are now estimated to 
have reduced to approximately 51.1 percent even though the 
PUC cites its need for technical expertise as one of the key 
reasons for the subject contract. 

Source of Funds: Mr. Wong states that the PUC expects to fund the subject 
contract through existing bonds 1 , operating revenues, and 
future bond proceeds, progressively securing funding as the 
capital improvement program proceeds. Mr. Wong states 
that if future bond funding for the proposed capital 
improvement program is not approved by the voters or 
funding for the capital improvement program is not 
appropriated by the Board of Supervisors, the Contractor 
would not be requested or paid to perform program 
management services. According to Mr. Wong, the PUC 
believes that over the course of the four year contract term, 
the maximum $45,000,000 cost of the Contractor would be 
more than offset by the anticipated $138,000,000 savings 
generated by the Contractor. The estimated savings of 
$138,000,000 are based on savings of 10 percent for the 
estimated $1,380,000,000 cost of the first four years of the 
capital improvement program. The $1,380,000,000 total cost 



1 In November of 1997, San Francisco voters approved $304,000,000 in Water Revenue Bonds. The 
PUC can also utilize $238,000,000 remaining available funds from bonds issued in 1991, 1992, and 
1996 for the replacement of existing faculties and for compliance with Federal and State law. Mr. 
Wong advises, however, that funding beyond these approved amounts, which total $542,000,000, is 
uncertain. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

5 






Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

estimate was prepared by PUC staff in 1998 and has not 
been reviewed or adjusted since. A new estimate will be 
included in the anticipated November of 2000 draft of a new 
ten year capital improvement plan, according to PUC staff. 

Description: Under the subject contract, the proposed Contractor would 

provide program management services to the PUC to 
organize and implement its capital improvement program by: 

• Providing specialized expertise in the management of 
very large capital programs. 

• Improving the PUC's engineering and construction 
operations by developing program management and 
control plans, systems, tools, and reports. 

• Providing personnel for workload peaks (except on 
detailed design work). 

• Designing a PUC staff development program. 

• Developing a public information program. 

• Assisting disadvantaged business enterprises. 

The Budget Analyst's previous report indicated, based on 
information provided in the PUC's RFP, that identification of 
new funding sources for the capital improvement program 
would be one of the tasks to be performed by the Contractor. 
In response to a specific question raised by the Finance and 
Labor Committee about this proposed Contractor role, PUC 
staff now advise that identification of new financing sources 
is not a task required by the subject contract. Instead, this 
work will be done by PUC staff. PUC staff note that (a) the 
PUC's Assistant General Manager for Finance and 
Administration has almost 20 years of financing experience, 
(b) the PUC has issued a RFP for contractual financial 
advisory services (in addition to the subject $45,000,000 San 
Francisco Water Alliance contract), and (c) the PUC's 
Finance Bureau is being reorganized to increase its financial 
planning and debt administration capacity. 

In response to a specific question raised by the Finance and 
Labor Committee about the Contractor's involvement in 
developing a public information program, PUC staff advise 
that existing PUC staff would provide the bulk of the public 
information program effort. However, because the capital 
improvement program involves planning and construction 
work in a number of widely dispersed counties, PUC staff 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



Memo to Finance and Labor Committee . 

August 23, 2000 Finance and Labor Committee Meeting 

believe they will need assistance with public meetings, 
community outreach, informational materials, and media 
relations. PUC staff state that when special skills or staff 
augmentation is required, the Contractor would provide as- 
needed support services to the PUC's communications staff 
as part of the subject $45,000,000 contract. 

With regard to assisting disadvantaged business enterprises, 
program participation goals of 30 percent minority-owned 
business enterprise (MBE) participation and 10 percent 
women-owned business enterprise (WBE) participation 
would apply to the first year of the subject contract. In 
response to a specific question raised by the Finance and 
Labor Committee about how the subject contract's 
MBE/WBE goals were determined, PUC staff advise that 
these goals were established in accordance with City 
regulations, practices, and procedures. According to 
information provided by Mr. Quan, the Contractor's actual 
MBE/WBE participation rate would be in excess of the 
minimum first year requirements. In addition, the Public 
Utilities Commission required, with the concurrence of the 
Human Rights Commission, that MBE program participation 
goals would increase 2 percent annually and WBE 
participation would increase 1 percent annually. The MBE 
and WBE subcontractors which are part of the San Francisco 
Water Alliance are listed in appendices to the subject 
contract. 

Background: In February of 1998, the PUC published a draft of its long- 

term water enterprise capital improvement plan. The plan 
proposed a 12 year capital improvement program comprising 
approximately 200 water projects for a total cost of 
approximately $3,500,000,000 to (a) upgrade the water 
system infrastructure, (b) respond to increasing service 
demands, and (c) fulfil new regulatory requirements. 

Having undertaken initial program planning, the PUC 
proposed contracting out the program management of the 
capital improvement program. The initial concept was for a 
ten year program management services contract 
(renegotiable every four years). Under that proposed 
contract, a chief program management contractor would 
report directly to the PUC Commissioners and contractor 
staff would provide long term assistance to PUC's Utilities 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Engineering Bureau (UEB) staff with a senior consultant 
team reporting to the UEB Manager. The proposed concept 
for the integration of PUC and contractor staff was that they 
would share decision-making responsibilities and would 
share the program risks. 

Following PUC staff members' December 15, 1998 
presentation to the Commission on the proposed capital 
improvement program, the Commission authorized the 
drafting of a Request for Proposals (RFP). As part of the 
RFP drafting process, in February of 1999 the PUC consulted 
with the International Federation of Professional and 
Technical Engineers (IFPTE) Local 21, AFL-CIO. In March 
of 1999, the IFPTE sought an injunction against the subject 
contract on the grounds that (a) Section 10.104 of the City 
Charter prevents contracts with private companies for 
program management services until the Controller and the 
Board of Supervisors have determined that such work can 
performed under private contract at a lower cost, and (b) its 
members would be unlawfully deprived of public sector work 
they could competently perform at a lower cost. On March 
13, 2000 the San Francisco County Superior Court issued a 
summary judgement in favor of the PUC and against the 
IFPTE on the grounds that Charter Section 10.104 did not 
apply and hiring a program management contractor was 
justified by (a) the urgent need for the capital improvement 
program, (b) the PUC's need for specialized expertise over 
and above its commitment to hire more engineering staff, (c) 
the temporary nature of the program management 
contractor's services, (d) the PUC's potential need for 
engineering assistance to staff temporary peak workloads, (e) 
the speculative nature of the IFPTE's claim that there would 
be duplication or displacement of PUC staff, and (f) the Civil 
Service Commission's approval of the subject contract on 
June 4, 1999. According to Ms. Linda Ross of the City 
Attorney's Office, the IFPTE has subsequently filed a Notice 
of Appeal. As of the writing of this report, the Budget 
Analyst has no further information on the status of this 
appeal. 

During the lawsuit, negotiations between the PUC and the 
IFPTE significantly scaled down the subject contract's 
original concept. The RFP, as advertised in July of 1999, was 
for a four year contract not to exceed $45,000,000 (depending 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



on availability of funding), in which as-needed contractor 
staff would report to UEB managers. There would be no 
direct reporting line to the PUC Commissioners, PUC 
management would retain full decision-making 
responsibilities, and contractor staff would not directly 
supervise City employees. 

Four private firms and joint ventures submitted bids on 
September 15, 1999. These were: 

• San Francisco Water Alliance, a joint venture of (1) 
Bechtel Infrastructure Corporation, (2) The Jefferson 
Company, and (3) Sverdrup Civil, Inc., in association with 
(a) Olivia Chen Consultants, Inc., (b) Carollo Engineers, 
(c) Raines, Melton & Carella, Inc., (d) Cooper Pugeda 
Management Inc., (e) Greg Roja and Associates, Inc., (f) 
Whitted Dawson Associates, Inc., and (g) Orion 
Environmental Associates. 

• The H2O Partnership, a joint venture between (1) 
O'Brien-Krietzberg Associates, (2) CH2M HILL, and (3) 
EPC Consultants, Inc, in association with (a) Cornerstone 
Concilium, Inc., (b) DAJA, Inc., (c) Mendoza and 
Associates, (d) Saylor Consulting Group, (e) JFW 
Consultants, (f) Pendergast & Associates, (g) Butler 
Enterprise Group, (h) Micro Search Environmental, (i) 
Ocampo-Esta Corporation, and (j) Cervantes Design 
Associates. 

• San Francisco Water Associates, a joint venture between 
Parsons Infrastructure and Technology Group Inc., AGS 
Inc., and Don Todd Associates, Inc., in association with 11 
subcontractors. 

• Montgomery Watson Americas, Inc., in association with 
27 subcontractors. 

A team of City staff comprising Ms. Virigina Harmon of the 
Human Rights Commission, Mr. Bill Keany of the PUC, Mr. 
Paul Mazza of the PUC, Mr. Quan, and Mr. Wong reviewed 
all four proposers by means of client site visits during 
November and December of 1999. A four member expert 
evaluation panel then interviewed the four proposers and 
scored each of them against the criteria set out in the RFP 
(as shown in Attachment II). This evaluation panel consisted 
of Dr. Johnnie Clark, a financial consultant, Ms. Margaret 
Leporte, representing the Bay Area Water Users Association, 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Ms. Raynetta Grant, a local government water utility 
engineering manager, and Mr. Kevin Lyons of the PUC. The 
evaluation team scored the H2O Partnership proposal 
highest (with a score of 2,780 2 ) and the San Francisco Water 
Alliance second highest (with a score of 2,700). Montgomery 
Watson Americas, Inc. scored 2,480, while San Francisco 
Water Associates scored 2,460. The PUC Commissioners 
interviewed the top two scoring joint ventures at a public 
meeting on April 7, 2000, and indicated a preference for the 
San Francisco Water Alliance, subject to successful 
negotiations over contract costs. No reason was given as to 
why the Commissioners gave first preference to the San 
Francisco Water Alliance which had previously received a 
lower score from the expert evaluation panel than the H2O 
Partnership. On May 10, 2000, the PUC awarded the 
proposed contract to the San Francisco Water Alliance 
subject to final contract negotiation and approval of the 
Board of Supervisors. 

Initial consideration of the subject contract by the Finance 
and Labor Committee at its July 19, 2000 meeting resulted 
in the PUC requesting a two week continuance to negotiate 
(a) performance measures for inclusion in the subject 
contract, and (b) greater Board of Supervisors oversight. 
Successful negotiations between the PUC and the San 
Francisco Water Alliance have resulted in agreed 
performance measures (see Comment No. 2) and provision for 
annual Board of Supervisors approval to renew the subject 
contract (see "Terms of the Subject Contract" below). The 
PUC has also provided responses to other specific questions 
raised by the Finance and Labor Committee. These 
responses have been incorporated into the text of this report, 
while the PUC's written responses are included in 
Attachment IX (see Comment No. 18). 

The Public Utilities Commission is scheduled to consider the 
amended contract at its meeting of August 22, 2000. 



2 Scores are calculated by multiplying the qualitative score for each one of the six criteria by the 
respective weight to obtain the weighted score for each of the criteria. For example, the weight for 
Criterion 6 (Understanding of SFPUC Program) is 10; therefore, a qualitative score of 5 will 
translate into a weighted score of 50 for an individual evaluator. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Terms of the 

Subject Contract: Key contractual terms and conditions are as follows: 

• The City can, at its sole discretion, terminate the subject 
contract at any time. In response to a specific question 
raised by the Finance and Labor Committee about this 
provision, PUC staff advise that a termination for 
convenience right permits the City to terminate the 
contract at any time during its term, for convenience and 
without cause. The City can exercise this option by giving 
the Contractor written notice of the effective termination 
date. The subject contract does not mandate advance 
notice of any predetermined length of time. Contractor 
invoices for work undertaken up to the specified 
termination date would have to be submitted to the City 
no later than 30 days after that date. 

• The City has no obligation to fund the subject contract in 
lieu of funding other contracts. 

• The subject contract can only be extended beyond the 
initial term of four years with the Civil Service 
Commission's approval 3 . 

• The PUC controls the Contractor's role and assignments 
in terms of an annual implementation plan based, in part, 
on an annual performance review jointly conducted by the 
PUC and the Contractor. As a result of the annual review 
and the annual implementation plan, the City and the 
Contractor would determine the contractor staffing 
required during the next 12 months and the necessary 
contract budget. 

• Contractor and City staff would share City office space 4 
and work in combined teams under PUC managers. 

• Existing City staff would be used to the fullest extent. 
City engineers (or third party contractors) are the 
Engineers of Record 5 and construction managers for all 



3 In the opinion of Ms. Ross, any extended contract would require (a) separate Civil Service 
Commission authorization, and (b) Board of Supervisors approval if the extended contract would cost 
the City more than $10,000,000. 

4 According to Ms. Wendy Iwata of the PUC, the PUC plans to spend approximately $300,000 in FY 
2000-01 to renovate City office space for contractor staff. 

5 The "engineer of record" is a State requirement that a certified engineer be legally responsible for 
approving the design of a structure so that it is safe for public occupancy. The engineer of record 
assumes liability for the design for both the duration of the contract and for the subsequent 
warranty period. While the proposed contract does not allow the Contractor to assume this role, it 
would permit the Contractor to provide preliminary or conceptual engineering services and prepare 
schematic drawings to the extent necessary to define upcoming capital projects. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



capital improvement projects. The Contractor obtains 
written authorization from the City before (a) adding staff 
or subcontractors to its team, or (b) supplying personnel 
to provide expert services or to handle workload peaks. 

• The Contractor trains PUC personnel in systems, 
techniques, or technology used by the Contractor. 

• The Contractor assigns a core team of experienced 
individuals (named in the subject contract's appendices) 
for the duration of the contract. Replacements for key 
personnel are subject to the City's agreement. 

• The Contractor's performance is subject to third party 
audit 6 . 

• The Contractor reports monthly to the PUC on its 
performance. 

• To prevent conflicts of interest, the Contractor and its 
subcontractors cannot bid on PUC design proposals or 
construction contracts during the term of the subject 
contract. (However, subcontractors can bid if the UEB 
determines that there is no conflict of interest, according 
to Mr. Wong.) 

• The Contractor is an independent consultant fully liable 
for its acts and omissions. In response to a specific 
question raised by the Finance and Labor Committee 
about this provision, PUC staff advise that, under the 
subject contract, the Contractor has full liability for its 
subcontractors. 

• During disputes, the Contractor and subcontractors waive 
all rights to discontinue services or seek any relief which 
would stop or delay the progress of capital improvement 
projects. 

The subject contract would have a maximum four year term. 
Within that term, the Controller would be required each year 
to certify the availability of funds for the subject contract. 
Under the amended terms of the subject contact, such 
certification would depend upon annual Board of Supervisors 
approval to continue the subject contract . Board of 
Supervisors approval would, in large part, depend upon 
objective evidence, provided by the PUC and verified by an 
independent audit performed by the Controller, that the 
Contractor had performed successfully against negotiated 



G According to Mr. Wong, the PUC is in discussions with the City Controller's Office about the 
Controller's involvement in such audits. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Proposed 

Contractor 

Remuneration: 



performance measures. In the event that the Board of 
Supervisors disapproves continuation, the contract would 
terminate with no liability on the part of the City. In the 
event that the Board of Supervisors does not act to 
disapprove continuation of the subject contract (provided the 
PUC has submitted the necessary performance reports in a 
timely fashion), the subject contract would continue. 

Within an upper cap of $45,000,000 over four years, under 
the subject contract the PUC would pay the Contractor 
through a combination of (a) direct salary costs (not 
including fringe benefits), (b) overhead costs (including 
fringe benefits), (c) a combination of fixed and performance 
fees, (d) administrative fees, and (e) other direct charges. 
Attachment I, provided by the San Francisco Water 
Alliance and the PUC in response to a specific Finance and 
Labor Committee request for an estimated break-down of 
the $45,000,000 budget into these five remuneration 
categories, shows a break-down of the $45,000,000 into the 
four categories shown in the Table below (direct salary 
costs and other direct costs are combined). The PUC notes 
that the remuneration to the Contractor shown below could 
change depending on funding availability and the capital 
improvement projects actually undertaken. 





Category 1: 
Direct Salary, 

Overhead, 

Multiplier, and 

Other Direct 


Category 

2: 


Category 3: 

Maximum 

Perfor- 


Category 4: 
Subcontractor 
Administrative 


Maximum 




Costs 


Fixed Fee 


mance Fee 


Fee 


Total 


Program 

Management 

Office 


$19,590,000 


1,240,610 


847,830 


177,230 


21,855,670 


Project and 
Construction 


20.650.000 


1.349.390 


922.170 


192.770 


23.114.330 


Management 
Services, and 












Technical 












Support 
Services 












TOTAL: 


$40,240,000 


$2,590,000 


$1,770,000 


$370,000 


$44,970,000 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



At a maximum cap of $45,000,000, the estimated 412,435 
hours of Contractor work, as shown in Attachment I, would 
represent approximately $109 per hour. Due to the lack of a 
PUC staffing projection for the capital improvement program 
(see Comments No. 8 and 9), it is not possible to compare this 
hourly rate with the hourly rate of using City employees 
instead. 

(a) Direct salary costs: Under the subject contract, 
direct salary costs would be limited to the actual salaries of 
the Contractor's project managers and technical staff. 
Charges for home office staff such as secretaries, clerks, and 
accountants would be included in the overhead for work 
charged at the Contractor's offices except those working 
directly on the project as approved and budgeted by PUC 
project managers in the relevant task order. The subject 
contract specifies the direct hourly rate for key individual 
contractor staff (ranging in Contract Year 1 between $30.00 
to $76.15 per hour without overhead). The billing rate for 
Contractor staff including overhead, which comprises direct 
salary plus a multiplier, is capped at $140.00 per hour in the 
first year (the PUC General Manager can approve 
exceptions) but can be adjusted in accordance with the 
Consumer Price Index thereafter. Salary rates can be 
adjusted annually by the amount of the change in the 
Consumer Price Index (CPI) for the previous year 7 . 

(b) Overhead Fees: Before the end of the first year of the 
subject contract, the Contractor would arrange for an 
independent audit of the overhead costs applied to direct 
salary costs. According to Mr. Wong, this audit would be 
performed by an independent auditor and would be reviewed 
by the Controller's Office in accordance with the standards of 
the Code of Federal Acquisition Regulations. Pending this 
audit, in the first year of the contract (depending on the 
actual results determined by the audit), provisional overhead 
fees would range between (a) 125 and 154 percent of direct 
salary costs for work performed by the prime consultants in 
their own offices, (b) 78 and 172 percent of direct salary costs 



7 Adjustments for individual Contractor employees could exceed the maximum CPI movement 
provided that the total adjustment dollars for Contractor employees dedicated to the subject contract 
does not exceed the maximum dollars based on the total direct salary paid on the contract for the 
previous year plus the CPI. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

14 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



for work performed by subcontractors in their own offices, (c) 
104 and 115 percent of direct salary costs for work performed 
by the prime consultants in PUC offices or construction sites, 
and (d) 113 percent of direct salary costs for work performed 
by the subcontractors in PUC offices or construction sites. 
The overhead rates would be adjusted annually, based on the 
annual audit. However, in no case can the audited overhead 
rate for any prime consultant or subcontractor exceed (a) 172 
percent for work performed in their own offices, or (b) 115 
percent for work performed in PUC offices or construction 
sites (117 percent if payroll tax is included). According to 
information provided by Mr. Quan, the negotiated overhead 
rates appear to be comparable with those negotiated for other 
large public sector capital improvement programs. 

(c) Fixed and Performance Fees: In addition to direct 
salary costs and related overhead fees, the Contractor would 
also be remunerated on the basis of the "performance/at-risk 
fee" arrangement outlined in the Table below, depending on 
the Contractor's achievement of tasks prescribed by the City, 
each task having a specific scope of work, timeframe, 
guaranteed maximum cost structure, savings target, and 
other performance measures. Assuming successful task 
completion, the Contractor receives a fixed fee as a 
percentage of the Contractor's contract billing for that task 8 . 
Assuming partial or complete achievement of the savings 
target and other performance measures, the Contractor 
receives some or all of an at-risk performance fee as a 
percentage of the Contractor's contract billing for that task. 
The percentage levels for both fixed and performance fees 
vary by contract year, as shown in the table below: 



8 "Contract billing" comprises just the Contractor's billing for work performed. It includes neither 
authorized pass-throughs for other direct costs nor the fee amounts paid by the City for 
subcontractors' invoices. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

15 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 







Performance 






Fixed Fee as 


Fee as 






Percentage of 


Percentage of 






Annual 


Annual 




Contract 


Contract 


Contract 


Maximum 


Year 


Billine 


Billing 


Total 


1 


8.0% 


0.0% 


8.0% 


2 


7.0% 


4.5% 


11.5% 


3 


6.0% 


5.5% 


11.5% 


4 


5.0% 


6.5% 


11.5% 



According to information provided by Mr. Quan, the 
maximum total annual fee for Contract Years 2 through 4 
appears to be at the low end of the range of fees paj-able to 
program management services contractors involved in other 
public sector capital improvement programs. 

According to Mr. Wong, the fixed fee component would be 
paid by the City as invoices are submitted by the Contractor, 
while the performance fee component would be paid by the 
City semi-annually. In response to a specific question raised 
by the Finance and Labor Committee about the PUC's 
processing of Contractor invoices, PUC staff advise that 
invoices would be submitted through the normal approval 
procedure of the PUC's project manager and the PUC's 
Contracts Administration Section for approval prior to 
review, approval, and payment by the Controller's Office. 

(d) Subcontractor Administrative Fee: The PUC would 
also pay an administrative fee to the Contractor's joint 
venture partners of 3 percent of subcontractors' direct 
salaries plus overhead costs. Mr. Wong states that this 
administrative fee reimburses the Contractor for some of the 
administrative costs related to managing a number of 
Disadvantaged Business Enterprise subcontractors. In 
response to a specific question raised by the Finance and 
Labor Committee about determination of the subcontractor 
administrative fee level, PUC staff advise that the 3 percent 
rate was determined through negotiation between the PUC 
and the Contractor and compares favorably to the industry 
average of 5 percent for such administrative fees. Five 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

16 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 






percent is the standard subcontractor administrative rate 
used in other City contracts, according to PUC staff. 

(e) Other Direct Charges: In response to a specific 
question raised by the Finance and Labor Committee about 
other direct charges, PUC staff advise that all other direct 
charges incurred by the Contractor would be approved in 
advance by the Manager of the UEB if they are in 
conformance with the Code of Federal Acquisition 
Regulations (the standard applied to City employee 
expenses), directly related to a project, and consistent with 
City policies. They would be reimbursed at cost as no mark- 
ups would be allowed. Such charges would be limited to out- 
of-town travel, messenger services, specialty printing, 
specialized software and hardware, and specialized services, 
materials, and equipment not provided by the PUC. Any 
equipment purchased through this contract would become 
the property of the PUC. 



Comments: Program Cost Savings 



1. UEB staff contend that the subject contract would secure 
program cost savings by means of economies of scale, 
program efficiencies, project acceleration, contract 
negotiation power, increased purchasing power, innovative 
technology, value engineering 9 , and controlled changes to the 
program's scope and schedule. UEB staff contend that 
relying on PUC employees to manage the capital 
improvement program would increase costs because it would 
lengthen the time taken to complete the program. 

Mr. Wong states that program management services 
contracts' ability to offset costs through savings have been 
demonstrated internationally. This argument was initially 
supported only by the anecdotal evidence contained in six 
highly summarized United States case studies which make 
up the small sample. The PUC staffs presentation to the 
PUC Commissioners of three positive examples was 
accompanied by the disclaimer that "Meaningful 
measurement of cost savings is difficult ... because the 



9 "Value engineering" is the independent overview of a facilities plan, its design criteria, and its 
conception at no more than 20 percent of design completion, to ascertain how well and cost 
effectively a plan addresses the engineering problem it is meant to solve. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



benchmark is often not well defined, and most calculations 
are based on preliminary estimates of program costs made by 
the program management contractors themselves." 
Furthermore, the information presented was gathered 
verbally by PUC staff and is unsupported by audited written 
documentation. The second three examples represent a 
selection of public sector program management failures 
which neither fully evaluate the root causes of the cost 
overruns associated with those projects, nor explain how a 
program management consultant would address those 
problems. For example, the Budget Analyst notes that the 
cost of the Boston Central Artery Program has been 
significantly affected by project scope changes, 
environmental mitigation, and inflation, three factors which 
could be equally outside of the control of either public or 
private sector program managers. 

To provide further evidence of program cost savings, the PUC 
has subsequently solicited the following three letters from 
clients of the proposed contractors about the benefits of 
capital improvement program management services (the 
testimony was submitted at the July 19, 2000 Finance and 
Labor Committee meeting): 

• The former Manager of the capital improvement program 
of the City of Portland, Oregon testified that Sverdrup 
Civil, Inc. saved that city $45,000,000, or 15 percent, of 
the first $300,000,000 of projects to eliminate sewer 
overflows into the Williamette River. 

• The former Executive Director of the Santa Clara County 
Traffic Authority testified that Bechtel Infrastructure 
Corporation saved $116,000,000, or approximately 9.7 
percent, of a $1,200,000,000 transit infrastructure capital 
improvements program, and took between four and 13 
years less than the schedule originally estimated by 
Caltrans. 

• The Managing Director of North West Water Limited in 
the United Kingdom testified that Bechtel Infrastructure 
Corporation's program management services saved 
$485,000,000, or approximately 21.1 percent, of its 
$2,300,000,000 capital improvement program. 

2. The initial contract considered by the Finance and Labor 
Committee lacked performance measures which would 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

18 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



permit the PUC to measure the program cost savings 
generated by the Contractor. In response to concerns 
expressed by the Finance and Labor Committee, the PUC 
and the Contractor have negotiated the long term and short 
term performance measures and first year milestones 
contained in Attachment III. These performance measures 
and first year milestones form an Appendix incorporated by 
specific reference in the proposed contract. At the end of the 
first contract year, the Contractor's performance against each 
performance measure and milestone would be assessed in 
terms of improvement relative to the UEB's current 
performance (the "baseline" measure). The Contractor's 
performance against the baseline would be used to determine 
the succeeding 3 r ear's performance goals. The Budget 
Analyst considers that any audit of Contractor performance 
against contractual performance measures should also verify 
the validity and accuracy of the baseline measures. 
According to PUC staff, the PUC is confident that the 
baseline performance measures proposed for the performance 
measures contained in Attachment III would be found to be 
accurate and relevant under such independent auditor 
verification. 

PUC staff state that additional performance measures and 
milestones will be added in future years as the nature of the 
work changes. 

In addition to the annual PUC report to the Board of 
Supervisors on the Contractor's performance, PUC staff could 
facilitate Board of Supervisors program oversight and control 
by providing the following: 

• The Contractor's monthly written reports to the Public 
Utilities Commission. 

• The Contractor's quarterly presentations to the 
Commission. 

• The PUC and Controller's Office semi-annual audits of 
progress against performance measures. 

• The annual review by the Controller's Office of 
independent financial audits of each contractor 
participating in the San Francisco Water Alliance. 

3. PUC retention of overall program management 
responsibility appears to have the following advantages over 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

19 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



sharing decision-making responsibility with, or delegating 
such responsibility to, a program management services 
contractor: 

• Program accountability, final decision-making, 
expenditure authorizations, and overall cost control 
responsibility reside appropriately with City employees. 

• PUC staff members' expertise in local water and sewer 
systems is maximized. 

• City employees are the most familiar with San Francisco's 
public sector administrative, appropriation, and policy 
development processes, and with the expenditure 
requirements of bond-funded programs. 

• An organizational focus on the capital improvement 
program will require the PUC to plan the future 
management of its infrastructure more strategically. 

Personnel Cost Savings 

4. PUC staff contend that the subject contract would secure 
considerable personnel cost savings for three reasons: 

(a) The PUC would not need to hire additional staff who 
would no longer be necessary once they had completed 
work related to the capital improvement program. PUC 
staff have not estimated the total amount of these alleged 
savings. However, given natural staff attrition over a 12 
year program comprising approximately 200 diverse 
projects, the Budget Analyst questions whether the PUC 
would actually need to terminate any staff after 
completion of the capital improvement program. 

(b) The Contractor could respond more flexibly to changing 
staffing requirements and workload peaks. The Budget 
Analyst notes, however, that redeployment or addition of 
contractor staff is subject to prior PUC approval which 
raises the question of whether such redeployment or 
addition of contractor staff would actually be faster than 
redeploying PUC staff. 

(c) Using contract staff would circumvent the difficulties in 
hiring new permanent staff (see Comments No. 6 and 7 
below). 

5. Mr. Phil Arnold of the PUC provided an informal 
comparison of UEB staff classifications at 1998-99 salary 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

20 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



levels with the 1997-98 hourly billing rates for comparable 
staff employed by a selection of as-needed UEB contractors. 
Mr. Arnold states that this comparison indicates that the 
UEB pays more for low level staff, but less for high level 
staff. Therefore, using the Contractor's more junior staff for 
peak workloads would be cheaper than the UEB hiring 
equivalent staff. The Budget Analyst notes, however, that 
low level staff are likely to perform functions which could be 
competently performed by City employees. In situations 
where the UEB only requires specialist technical skills for 
short periods of time, UEB staff contend that the higher cost 
of contractor staff is offset by the costs imposed by the civil 
service hiring constraints described below. 

6. PUC staff emphasize the difficulty in hiring permanent 
City staff, citing the following reasons for hiring delays: 

(1) The lengthy process to fill even recently vacated 
positions for which there is budgetary provision. 

(2) Outdated civil service lists, union protests about list 
certifications, and the Department of Human Resources' 
reluctance to permit provisional hires before lists are 
completely exhausted. 

(3) The lack of certain specialist job classes in the Civil 
Service Commission's classification system which does 
not permit the PUC to request specific job skills within, 
for example, the construction management, architect, or 
engineer classes. 

7. As previously reported to the Finance and Labor 
Committee, the PUC takes between 33 and 68 weeks (or 
more) to hire a staff member into a budgeted position. Of 
this time, the Budget Analyst notes that between 21 and 29 
weeks is consumed by processing the filling of a vacancy 
within the PUC. While the PUC needs to work closely with 
the other agencies involved in personnel hiring to expedite 
recruitment, the Budget Analyst strongly recommends that 
the PUC also streamline its own personnel hiring practices. 
In a letter dated February 10, 2000 to the California State 
Auditor, the PUC General Manager wrote that the PUC 
personnel unit "was increased in 1998 by twelve positions (a 
growth of approximately thirty percent) to promote 
additional hiring." Despite these 12 new positions, and the 
three new personnel positions approved in the FY 2000-01 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

21 






Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



budget (a 1204 Senior Personnel Clerk, a 1241 Personnel 
Analyst, and an 1817 Procedural Writer), the Budget Analyst 
notes that ongoing internal PUC personnel processing delays 
seem to continue. Such hiring delays have significantly 
contributed to the UEB salary underexpenditure of 
$11,702,490 for the first 11 months of FY 1999-00 10 . 

8. The Budget Analyst also notes that the PUC has not 
formulated a rigorous staffing projection beyond FY 2000- 
2001, even for the short-to-medium term, to staff City 
positions for the capital improvement program. The PUC 
has not determined: 

• The exact number of full-time equivalent staff the PUC 
would require if the PUC was to provide all the staff 
required for its capital improvement program. 

• Those staff members' job descriptions, job classifications, 
and their level of seniority within those job classifications. 

• The most appropriate employment conditions for each 
position (for example permanent civil service, limited 
tenure, or temporary positions, or personal services 
contracts). 

• When an existing classification could not provide the 
necessary engineering expertise. 

• When staff from other City departments which employ 
construction management services staff could be used 11 . 

• The impact of attrition rates on employee turnover within 
different job classifications. 

The Budget Analyst notes that the lack of a staffing 
projection led the California State Auditor to recommend 
that the PUC "develop a formal comprehensive plan to 
outline the staffing requirements necessary to complete its 
capital improvement plans." 

9. The San Francisco Water Alliance has proposed that it 
will need to employ 45 staff for the first year of the subject 
contract, as listed in Attachment IV. According to Ms. Iwata, 
the PUC is currently seeking the Contractor's justification for 
this number of contract staff given that the PUC will need to 



10 This underexpenditure figure includes both engineer and non-engineer salaries. 

11 Mr. Quan states that a review of DPW, MUNI, the Port, and the Airport undertaken in July and 
August of 1999 indicated that no such staff are currently available for PUC purposes. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

22 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



find office space for them. Without a staffing plan, the 
Budget Analyst is unable to compare the relative costs and 
benefits of using City employees versus consultants for the 
capital improvement program. Furthermore, the Budget 
Analyst questions what staffing projection criteria the PUC 
will use to evaluate the Contractor's staffing requests. 

PUC Performance and Workload Issues 

10. During the three years between FY 1997-98 and FY 
1999-00, the PUC capital improvement program budget 
totaled $402,546,036 (see Attachment V, provided by Mr. 
Wong). However, during the same three year period, the 
PUC expended just $265,752,104, or approximately 66 
percent, of that capital improvement program budget (see 
Attachment VI, provided by Mr. Wong). 

The California State Auditor has expressed concern at the 
insufficient capital improvement program activity given the 
identified capital improvement needs. The California State 
Auditor identified the following causes for capital 
improvement program management problems at the PUC: 
the absence of an effective tracking system to monitor the 
progress of capital projects and the completion of preventive 
maintenance, much delayed cost and schedule estimates for 
all identified capital improvement projects, inefficient 
contracting procedures (see Comment No. 16 below), 
outdated project operations manuals and procedures, weak 
capital project and preventive maintenance monitoring, and 
inadequate formal project management training. 

11. As shown in Attachment VII, in the five years between 
FY 1995-96 and 1999-00, the number of filled UEB technical 
staff positions (denoted as "active engineers" in Attachment 
VII) has increased by approximately 188.7 percent, from 62 
to 117. These technical staff are responsible for San 
Francisco Water Department (SFWD) and Hetch Hetchy 
Water and Power (HHWP) capital improvement projects 
only. According to Mr. Wong, under the Memorandum of 
Understanding between DPW and the PUC which 
transferred the responsibility for the Clean Water Program 
(CWP) from DPW to the PUC, DPW engineers remain 
responsible for the technical aspects of CWP capital 
improvement projects which are funded by the PUC. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



12. In FY 2000-01, if the FY 1999-00 total of 117 filled 
technical staff positions is maintained, the current 39 
technical staff vacancies are filled, and the 12 new technical 
staff positions approved for FY 2000-01 are also filled, then 
there will be 168 filled technical staff positions in the UEB. 
This represents an approximately 271 percent increase in 
technical staffing positions since FY 1995-96. The FY 2000- 
01 capital improvement program budget for SFWD and 
HHWP is $150,870,700. This represents an average 
budgeted capital improvement project workload for each of 
the 168 UEB technical staff in the amount of $898,040 in FY 
2000-01. 

13. The Budget Analyst notes, however, that in terms of 
actual SFWD and HHWP capital improvement program 
expenditures between FY 1995-96 and FY 1999-00, an 
average workload per filled UEB technical staff position of 
$898,040 would be approximately 40.5 percent higher than 
the previous high average workload of $639,140 in FY 1998- 
99. Mr. Wong of the PUC argues that the PUC could not 
achieve a 40.5 percent productivity increase per staff 
member. The Budget Analyst notes that a number of factors 
suggest that the PUC should be able to absorb at least a 
significant portion of that 40.5 percent workload increase: 

• The PUC has invested in a number of initiatives to 
improve productivity, including the implementation of a 
new automated system to track preventive maintenance 
requirements, the development of a formal management 
training program, and wider advertising of the continuing 
education opportunities for staff. 

• A considerable proportion of the new technical staff hired 
in FY 1999-00 were journey level or above. 

• New technical staff received enhanced training in FY 
1999-00. 

• Long-term UEB technical staffs experience and expertise 
should increase significantly each year. 

• The PUC's pool of technical expertise is growing with the 
planned increase from 117 to 168 technical staff in the 
UEB. 

The Budget Analyst notes that every 10 percent increase in 
productivity over FY 1998-99 levels for all 168 UEB technical 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



staff would mean that $10,737,552 less work would need to 
be assigned to Contractor staff. 

14. In addition, the Budget Analyst notes that the UEB 
augments its staff capacity by (a) assigning SFWD and 
HHWP projects to DPW, and (b) hiring architecture and 
engineering consultants through competitive procurement. 
On August 15, 1997 the PUC signed a Memorandum of 
Understanding with the DPW for engineering work in excess 
of UEB's capacity. This Memorandum of Understanding 
gives DPW the first right of refusal on PUC engineering work 
which cannot be undertaken by PUC staff. 

15. According to Mr. Wong, the PUC is currently developing 
the latest update of its capital improvement program. As 
this planning process will not be complete until November of 
2000, the PUC is unable to advise the Budget Analyst as to 
the projected capital improvement program budgets for each 
of the next four years. Mr. Wong advises that the capital 
improvement program budgets for each of the next four years 
are expected to be at least comparable to those in FY 1999-00 
($189,644,430) and FY 2000-01 ($178,870,700). However, it 
is not possible to calculate with any precision what the 
workload per UEB technical staff member over the four years 
of the subject contract will be. Given this, and the absence of 
a staffing plan (as noted in Comments No. 8 and 9 above), 
the Budget Analyst questions the PUC's ability to accurately 
quantify the workload impact of the PUC's capital 
improvement program on UEB staff and, therefore, the 
PUC's need for contractor staff to help with workload peaks. 

Use of a Single Contractor 

16. The IFPTE expressed concern that too many services 
are being bundled into the subject contract which potentially 
(a) deters termination of the contract in the event of 
performance failure, (b) allows the Contractor to assign work 
to itself or its subcontractors, and (c) provides a disincentive 
for the Contractor to provide accurate performance 
information to the PuC. In response, Mr. Wong advises that 
these concerns have been addressed by the negotiated 
contract in terms of (a) the termination of convenience 
clause, (b) City staff members' responsibility for final 
decisions, and (c) the requirement for regular monthly 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

25 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



reports, semi-annual reviews, and annual audits. 
Furthermore, Mr. Wong advises that the PUC 
Commissioners prefer one contract in order to: 

• Centralize responsibility and accountability. By 
channeling the work through one prime Contractor, the 
PUC contends that it (a) makes the Contractor fully 
responsible for its output and the output of its 
subcontractors, (b) reduces the PUC's liability by having 
only one point of contact, and (c) reduces the 
subcontractors' liability because the prime Contractor 
carries the bulk of their liability. 

• Maintain integration of program management and 
construction because (a) the profit for the Contractor 
comes from savings achieved (as explained in the section 
on "Proposed Contractor Fees" above), not from the 
program management services, (b) the Commissioners 
want a Contractor with specific utility business expertise 
who cares equally about program management and 
construction, and (c) integration supports the goal of 
centralized responsibility and accountability discussed 
above. 

• Avoid multiple, expensive, and lengthy contractor 
selection processes. PUC staff contend that it is cheaper 
and quicker to have just one contract. With regard to 
cost, the PUC advises that the average cost of a contractor 
selection process is $150,000. With regard to length of 
time, a May of 1997 PUC consultant's report stated that it 
took six to 12 months for the PUC to complete a single 
contracting process, from development of the RFP to the 
award of the contract. This was twice as long as the DPW 
contracting process, according to the consultant. Since 
1997, the PUC has revised its financial reporting and 
auditing standards, clarified its expectations and 
approval process for professional service contracts, and 
increased and centralized its contracting staff. The 
Budget Analyst would therefore assume that the PUC 
should now handle multiple contracts efficiently and cost 
effectively. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

26 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Role of Each Joint Venture Partner and 
Subcontractor 

17. In response to the Budget Analyst's prior report on this 
proposed contract, Attachment VIII, provided by the San 
Francisco Water Alliance and the PUC, contains an 
organization chart which illustrates how lead Contractor 
staff from each of the joint venture and subcontractor 
organizations would be integrated into the PUC's capital 
improvement program staffing. Additional as-needed 
Contractor staff would be provided to meet peak workload 
demands. Attachment IV lists the 45 key Contractor staff 
who would be dedicated to the contract. 

18. As previously noted, during its July 19, 2000 
consideration of the first version of the subject contract, the 
Finance and Labor Committee raised a number of specific 
questions. Attachment IX contains the PUC's written 
responses to 13 questions posed by the Finance and Labor 
Committee. The PUC has not responded in writing to a 
further request that consideration be given to a Phase I and 
Phase II contract. Instead, the PUC has proposed amended 
contract language to provide for annual Board of Supervisors 
review of the Contractor's performance, as described in this 
report. 

With regard to a request for more information about the 
Public Utilities Commission's selection of the proposed 
Contractor, PUC staff advise that the Vice-President of the 
Public Utilities Commission will be present at the Finance 
and Labor Committee's August 23, 2000 meeting to respond 
directly to the Committee. 

Summary: Pursuant to Motion No. M99-38, approved by the Board of 

Supervisors on April 12, 1999, the Budget Analyst was 
directed to review the subject contract in terms of the 
following three-part question. Would the subject contract (a) 
increase or decrease costs, (b) increase or decrease the 
oversight of expenditures, and (c) provide any other benefits 
or costs when compared to managing the PUC's capital 
improvement program with existing and/or new City staff? 

With regard to the first part of the question as to whether the 
subject contract would increase or decrease costs, the PUC 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



has provided the Budget Analyst with (a) limited substantive 
data, in the form of letters from clients of the proposed 
contractors, to prove the subject contract would decrease 
program costs, and (b) no data to prove that the subject 
contract would decrease personnel costs. The absence of a 
rigorous staffing projection beyond FY 2000-2001 to staff 
City positions for the capital improvement program means 
that the Budget Analyst is unable to compare the 
Contractor's proposed cost of approximately $109 per hour 
for 412,435 hours over four years with comparable cost and 
time information from the PUC. Furthermore, in relation to 
personnel costs, the Budget Analyst notes that the delay in 
staff hiring, which is one of the problems which the subject 
contract is designed to address, is significantly affected by 
internal PUC processes. 

However, the subject contract, as amended by PUC staff, 
does contain eight initial long term and seven initial short 
term "key performance measures" which are intended to 
enable the PUC and the Board of Supervisors to determine 
whether the subject contract had indeed decreased program 
costs. 

With regard to the second part of the question as to whether 
the subject contract would increase or decrease expenditure 
oversight, the Budget Analyst considers that the proposed 
contract would maintain, or even increase, oversight over 
expenditure, if the PUC meets its obligation, under the terms 
of the contract, to (a) specify precisely what work it would 
require the Contractor to perform and at what cost, and then 
to (b) monitor whether or not the Contractor had met those 
performance requirements. The Budget Analyst notes, 
however, that such increased oversight would also be 
possible if the PUC more tightly specified and measured the 
performance of its own staff, holding them accountable for 
the delivery of pre-determined outcomes. Mr. Wong advises 
that the PUC is enhancing the performance measurement 
capabilities of its staff to ensure improved expenditure 
oversight. In particular, the PUC is increasing its training 
emphasis on timely delivery of projects against scheduled 
milestones, and is increasing its management control of 
technical staff, according to Mr. Wong. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

28 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

With regard to the third part of the question as to whether 
the subject contract would provide any other benefits or costs 
when compared to managing the PUC's capital improvement 
program with existing and/or new City staff, the Budget 
Analyst reiterates that the PUC has provided insufficient 
data on which to make such an assessment. 

Recommendation: While the subject amended contract's performance measures 
are intended to provide measurement of the savings expected 
to result from hiring the Contractor, the PUC has not 
demonstrated how it would be more cost effective to enter 
into the subject contract than to have City employees fully 
responsible for program management. As this substantive 
question remains unanswered, the Budget Analyst considers 
approval of "the subject program management services 
contract to be a policy matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

9.Q 



Attachment I 



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83138 $8,520,000 
53.568 $5,110,000 
46,272 $5,960,000 

182.976 $19,590,000 


95040 $0,870,000 
56.464 $5,270,000 
75.955 $6,510,000 

229.499 $20,850,000 


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14.400 $1,490,000 
12.576 $1,710,000 

46.560 $5,380,000 


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6,160 $780,000 
"280 $1,570,000 

44.064 $4,210,000 


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14.400 $1,431,600 
11.620 $1,524,800 

44.544 $5,000,000 


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18,720 $1,730,000 
20.160 $1,760,000 

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25.920 $2,450,000 
13.440 $1,240,000 
13.058 $1,816,800 

52.416 $5,310,000 


36 268 $3,250,000 
19.584 $1,740,000 
23.328 $1,960,000 

79.200 $6,990,000 


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11.328 $950,000 
9.120 $1,110,000 

39.458 $3,910,000 


14.784 $1,350,000 
12.000 $1,020,000 
15,187 $1,220,000 

41.971 $3,990,000 


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30 



sfpuc capital improvement program management services 
request for proposals 
Evaluation Score Sheet 



Atrachaent II 
raee 1 or 3 



Ncme ofrzrTTz: 



Reviewer. 



Daze: 



~NOisl: i ne cessations listed under each criteria eszabcsb the basis far a scire of Good . 
CRITERIA. TTFJGKT SCORE 

1. Program Management Approach 25 -j-.-zx.--~ 



l norcugn, strong & responsive program approach G 

to meet cnar'gT'g SFPUC needs for services £c expertise. 

Well developed, thorough, resoonsfve 5c considered D 

1= year & 4 year program imDiemenration plans. G 

inorougn, strong 5c specific aporcach to expedite program G 

cC project mipifmentaiion, achieve significant cost Sc rfm» savings. 

itrong, dear & precise definihon of success for SFPUC program 

results & client satisfaction. 

Strong, cetailed approach & recommendation of program 

management systems &C tools for control &C reporting 
i norougn, strong & specific aoprcach to specialized technical 

services for peak SFPUC workload. 

Strong, specific approach to specialized construction rnanagmret 

services, reviews, partnering, disouie resohmon & f^n^ avoidance. 

Thorough, strong & effective approach to the SFPUC Program 

m Diversify" cornmunitv outreach &C ^oals for inclusion of mmorrues 5c women. 

btrong, innovanve & specific aoproach to full urilitation and development of 

Uc3 Sc DPW staff, strong aooroach to Staff Develooment Program &c technology transfer. 



Outstanding (9) 
Superior (7) 
Good (S) 
Fair (3) 
Poor (1) 



Capabiijty of pmc Management team Members 



25 



i rograrn Manager has 15 years exoenence and strong technical 

background in field of expertise. 

I rograrn Manager has 5 years strong cxoerience as responsible program 

manager on similar water and/ or wastewater urograms of SI billion or more. 

l'rogram Manager &C approoriate PMC management team members hold 

current California PE licenses. 

Strong, cemonstrated record of success of Program Manager for PMC prime 

consultant on other similar, complex 5c challcnsmg programs as SFPUC 

Other team members have 8 years strong experience in held of expertise. 

Otner team members have 5 years strong exoenence in similar management 

positions on significant, Comdex 5c irnoortant uubiic works orograms as SFPUC. 

Strong management experience to hish standards, top quality 

penormance, cost savings 5c full client satisfaction 

Strong commitment to Dromoring diversity 5c record of 

success r--"<r-ng diverse workforce. 

Proves record of flexible, resoonsive 5c creative problem 

soivmg on comolex, imDortant 5c r'mTlr^g^rg Drcgrams. 

Sigmncant conrribunon to overall Drczram success, acconiDCshmeni 

or cheat ootectrves on nme 5c within budget. 

Strong expenenc; and skill in streamlined program management 5c 

implementation under public government orocesses and procedures. 

Unique knowledge, exoenence and cualuEcanons to oenomi 

roles and resoonsibuines in SFPUC orosram. 

31 



Outstanding (9) 
Superior (7) 
Good (5) 
Pair (3) 
Poor (1) 



Attachment II 

rase 2 of 3 
SFPUC CAPITAL IMPROVEMENT PROGRAM MANAGEMENT SERVICES 
REQUEST FOR PROPOSALS 

Evaluation Score Sheet 

Name of Firm: Rsxsosr. D ^. 

3 . Minimum Qualifications for PMC Team 

Annual prime or coflecfvc JV coroorate revenues 2 Yes □ Vo 

or S 100 million or more 

Sumcient capability of prims and JV oartners to secure appropriate -• Yes rj \" 

insurance coverage. 



A'OTE: l ae descriptions Hstsd under e.irh criteria esuib'dsb the basis for a. score of Good . 
CRITERIA TFHGHT 

4. C\PA3IIJTY OF FIRMS ON PMC TEAM 25 



SCORE 



10 years strong prime or coflemve JY prosram management c Ouzszzndir.° (9) 

experience on similar public works orograms of S 1 billion or more. □ Superior (7) 

id years signincant experience within team on water Sc wastewater Good (5) 

systems, operations &£ engineering (Prefer : Prime or ]V experience;. G Fair (5) 

d yeses strong management experience of prime or JV partners D Poor (1) 

on sigmncant, complex & important public works programs as SFPUC 

buDstantial corporate strength, reliability, nrrenr-a^ technical & manaserial 

capaDUirv- or prime or JV parmcrs to assume prime risks Sc responsibilibes. 

Strong expertise, depth of experience, sn-eugth Sc capability in 

s imila r management and/or T*r'nm',-nl services as proposed. 

Strong prime or JV resoonse to program challenges 5c difneuines, demonstrated 

aointy to auapt, recover &L achieve high oualitv resuits regardless of issues. 

Strong depth and breadth in current staff levels to meet 

SFPUC needs for flexible exoert services. 

rugn quality program results, proven success, cost £c time savings, 

and nigh client satisfacdon with services similar to proposed. 

Strong knowledge & understanding of California water 

issues, reguknons & stakeholder concerns. 

Strong record of firm's commitment to include 

minority- £c women-owned businesses on Droiect r~?— -^ 

bignincant experience with orograms ™iy to SFPUC 

Program m Diversity. 

Strong experience with client staff development c£ training, 

tecnnoiogy &: management systems transfer to clients. 

Demonstrated success with design/build Drojects, construcnor: 

saiety programs, parmering &C constrocnon cost control measures. 

Kererences orovided as requested. 



32 



Attachment il 
Page J c: J 
SFPUC CAPITAL IMPROVEMENT PROGRAM MANAGEMENT SERVICES 
REQUEST FOR PROPOSALS 
Evaluation Score Skezt 



Name of rzrrr 



Re-sicssr. 



Daze: 



NOTE: Toe descriptions ksied tender each criteria eszwasb the basis for a score of Good. 
CRITERIA yEIGKT SCORE 



5 . Approach to SFPUC Program in Diversity 



15 



5—0115, ^^^ commitment to rr-rrmh? ore-gram opporuimries 
for M3E/W3E Sties, especially these new to the SFPUC 
Significant utilization of MBE/W3E firms in important 
program management and technical roles. 
Creative approaches to SFPUC Program in Diversity, to promote 
mcrusioQ ot minorities 5i ■women m program 
Strong, clear &£ specif c plan to promote MBE/WBc 
growth & business development, transfer lechnology &. skills. 
Thorough, strong & specific plan for job reamness training, 
ore-aporendceship and paraprofessional mtemsmp training programs. 
Innovadve, aggressive programs & activities to encance enecuveness 
of SFPUC Program in Diversitv. 



6. Understanding of SFPUC Program 



ic 



Strong & thcroush understanding of capital improvement 

program goals & California -water issues. 

Strong, clear understanding of unique program apprcacn, 

financing Sc annual imolementanon pun. 

Strong grasp & understanding of -**aier, power 

5c u-aste^"aier ooeranons, facilides and capital projects. 

Strong understanding &C response to stakeholder concerns 

£c public accountability. 

Thorough, clear understanding of program financial issues. 

Strong understanding of local labor union issues, comnrunrrv values 

and employee stake in program. 

dear understanding of program constraints and contingencies. 

Strong, thorough responsiveness to Request ior 1 ropesais. 





- 


--' • 





Outstanding (9) 


□ 


Suverior (7) 


D 


Good (5) 


D 


Fair (5) 


D 


Poor (1) 











D 


Outstanding (9) 


D 


Suverior (7) 


□ 


Good (5) 


D 


Fair (3) 





Poor (1) 



GRAND TOTAL SCORE 



ICQ 



Toe SFPUC/HRC Contract ComoBance Opar'siU assess compliance ra& NoiuSxrinuumm and M3cs^31 
Utilization requirement Failure to comph 'jhR result in Zsquakpcacion jrom pmber conszcerazzor.. 

NOTE: Scores are calculated 'try multivrnng the value for the quaBzacse score by tie vxigbi (for exsmie, a 
qualitative score of Superior for No. < Pm°ram Management Ao vroacb zs 7z2>, or 175). 



33 



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36 



Attachment IV 



SFWA STAFFING - FTE / Year 



SFWA Core Team (per SFWA Proposal) 

Sandy Lawson (Engineering Manager) 

Secretary 

PC Engineer 

Estimator (Dennise Durkin) 

PMS / Cost Engineer 

Cost Schedule Engineer 

FSA / Cost engineer 

Area PC Engineer /Trend Engineer 

PCM Contract / Procurement Manager 

Outreach / Diversity Person 

Project Manager 

Project Engineer 



Sverdrup (Peterson, Construction Management) 
Sverdrup (Construction Management) 



S/T Bechtel 



S/T Sverdrup 



Jefferson: Diversity Specialist / Outreach 
Senior Estimator / Trend Engineer 
DBA / Systems Engineer 
Project Controls Engineer 
Procurement Manager 
EDMS Engineer 
Field Cost Engineer 
Contracts Administrator 
Technical Specialist 



S/T Jefferson 



RMC Randy Raines (Planning and Design) 
Planning Specialist 



SfTRMC 



Olivia Chen: Mechanical Engineer Optioneering 

Olivia Chen: Civil Engineer Specialist 

Olivia Chen: Planning Engineer / 4 Year Plan (T. Hodges) 

. S/T OC Consultants 



Roja: Asset Condition Support 

Roja Add'l Support (Optioneering / Value Engineering) 



S/T GRA 



Carollo: Construction Support 

Carollo: Optior?°ring /Value Engineering 



CPM: Sr Planning and Scheduling Engineer 

CPM: Planner 

CPM: Trend Engr / DBA 



S/T Carollo 



S/T CPM 



TOTAL SFWA 



20 



10 



1 
0.9 



45 



37 



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41 



Attachment IX 
Page I or 5 



QUESTIONS FROM THE 7/19/00 FINANCE AND LABOR COMMITTEE 
MEETING ON PROGRAM MANAGEMENT AND SFPUC RESPONSES 

1 . SFPUC to provide a) specific performance measures, objectives, work 
plan and budget for the first 12 months of proposed contract, and b) 
advice on how longer term performance measures and objectives will 
be determined. 

a) Performance measures and first year milestones are identified 
in Attachment 1*(Key Performance Measures for CIP) and 
include Project Design Completion, Construction Completion, 
Attainment of HRC Goais, Close-out of Construction Projects 
within Six Months, Accuracy of Engineer's Estimate, CIP 
Expenditure Progress. Short-term milestones include 
Completion of First Draft of CIP within 3.5 months; Completing 
Assessments and Providing Recommendations of UEB 
Organization, Project Controls, Project Plan Procedures; 
Complete Training Curriculum for Project Managers, Project 
Engineers, Contract Administration, Small Businesses, Safety. 

b) Some long term performance measures and objectives are 
spelled out in the Key Performance Measures, while other 
targets will be added in future years as the nature of the work 
changes. Each performance measure will be assessed each 
year to set succeeding year's goals. Measurements are 
compared to the current UEB baseline performance, with many 
Year One goals targeted at 25% improvement over baseline, 
followed by tentative goals of an additional 10% for Year 2, 
another 10% for Year 3, and another 5% for Year 4. 

2. SFPUC to provide options for yearly Board of Supervisors oversight: 

The Board can participate in any or all of the following progress reporting tool 
that the SFPUC will use to obtain oversight and control of the program 
management effort 

• Monthly written reports will be provided by the SFWA to the 
Commission. 

• Quarterly presentations will be made to the Commission 

• Semi-annual performance audits of SFWA by SFPUC and the 
Controller's Office will be conducted to assess progress on the 
performance measures. 

• The Controller's Office will review the independent financial audits of 
the prime and each sub-consultant annually. 

All of these reports can be shared with the BOS and Budget Analyst. 



-Refer to Attachment III of this report. 

42 



Attachment IX 
Page 2 or 4 



Program Management funding will be a line item in the annual Capital 
Improvement Plan submitted to the Commission and the BOS, which will 
require approval. Additionally, the BOS will be presented an annual report on 
the Consultant's performance. Based on the annual performance reports, the 
BOS shall have the right to disapprove the annual continuation of the 
contract. 

3. What are the estimated cost savings during the 10-15 year program? 

The SFWA / SFPUC have set a goal of saving 10% of the cost of the Capital 
Improvement Program (CIP) identified in the Program Management 
Consultants Request for Proposal (RFP) dated July 1999. That amounts to 
about $138 million (10% of $1.38 billion) in savings during the first 4 years of 
the program. The $1 .38 billion estimate in the RFP is a planning estimate 
developed by the staff of the SFPUC and is based on 1998 dollars 

Currently there are only $500 million in funds available for the program. If no 
future funds are approved, the contract with the SFWA will be terminated. 
However, the 10% savings on the total cost of the CIP, remains as a goal, 
although the total value of the savings will be adjusted to reflect the overall 
value of the CIP that is influenced by the SFPUC. 

Training of the SFPUC staff by the SFWA will ensure that the program 
savings continue even after the SFWA contract is completed. 

4. Why would SFPUC contract out identification of new financing sources 
if this duplicates work done by existing SFPUC staff? 

Although the Program Management RFP requested proposers to offer this 
capacity, there is currently no task for identifying financing sources in the 
proposed contract. The SFPUC's Assistant General Manager for Finance & 
Administration has almost 20 years of financing experience, and the 
organization has issued an RFP for financial advisory services. In addition, 
the Finance Bureau staff is being reorganized, with additional capacity being 
added in the areas of financial planning and debt administration. 
Identification of alternative funding sources requires discussions with many 
parties, including the Program Management Consultant, but the work will be 
done by staff. 

5. Why is the SFPUC planning to contract out development of a public 
information program that would duplicate the work of the SFPUC's 
Public Information Office? 

Existing SFPUC staff will provide the bulk of the Public Information Program 
effort. The SFWA will support a significant capital improvement program that 
will involve extensive work in more than four Bay Area counties - San 



Attachment IX 
Page 3 or 4~ 



Francisco, Alameda, San Mateo and Santa Clara, and beyond. SFPUC 
facilities stretch from Yosemite National Park to the Bay Area, and into San 
Francisco. This huge endeavor calls upon expansion in every area of the 
SFPUC, including public affairs activities. Planning and construction will 
occur in the various counties, traversing over 150 miles. Public meetings, 
community outreach, public notification, informational materials and media 
relations will increase dramatically as projects move toward design and 
construction. When special skills or staff augmentation is indicated, support 
services will be provided to the current SFPUC communications staff on an 
as-needed basis. 

6. How were MBE/WBE goals determined? Are they based on state or 
local requirements? 

The goais were established in conformance with CCSF regulations, practices 
and procedures. The SFPUC unilaterally imposed additional 2% MBE and 
1 % WBE goals for each of Years 2, 3 and 4. 

7. Can the City terminate the contract at any time? 

According to the contract, the City has the option, in its sole discretion, to 
terminate the agreement at any time during the term, for convenience and 
without cause. The City shall exercise this option by giving SFWA written 
notice of termination. The notice shall specify the date on which termination 
shall become effective, and invoices should be received for fees earned 
within 30 days from specified termination date. 

8. Does the Contractor carry all the liability for its subcontractors? 
Under the contract with the SFPUC, the SFWA, Joint Venture, has full liability. 

9. SFPUC to break down the upper maximum Contractor remuneration of 
$45 million by the five remuneration categories. 

SFWA has provided a nominal breakdown based on information provide in 
the RFP - see Attachment 2* The breakdown may change depending on 
funding availability, and CIP projects. 

10. Would Contractor invoices be directly submitted to the City, or would 
they first be vetted by the SFPUC? 

Invoices would be submitted through the normal procedure of approval 
through the Project Manager, and then processed through Contracts 
Administration for payment. 



-R.efer to Attachment I of this report, 

44 



Attachment IX 
Page 5 of 5 



1 1 . How was the 3 percent subcontractor administrative fee level set? 
What is the industry standard? 

This figure was arrived at through negotiation and is lower than the usual 5% 
applied on other City contracts and within the industry. 

12. What are the criteria used to determine acceptance of "other direct 
charges"? 

Other direct charges can only be applied if they are in conformance with the 
Federal Acquisition Regulations (FAR), which is the same standard applied to 
City employee expenses. All charges must be directly related to a project, 
must be pre-approved, and will be consistent with City policies. SFWA will be 
reimbursed at cost for ODCs; no mark-ups are allowed. 

13. What are the respective roles and responsibilities of each SFWA 
company? 

Attachment 3ns an organization chart that shows how the SFWA is integrated 
into the SFPUC's Program Management effort. As previously discussed, the 
SFWA team will primarily provide special skills and tools related to managing 
a capital program of this size. In addition, they will provide as-needed staffing 
to meet peak demands for such things as construction management. The 
bulk of the program management activities will be provided by the 
SFPUC/City staff buttressed by the SFWA's management tools and expertise. 
Attachment 4"is a staffing plan for the SFWA based upon the baseline 
information in the RFP. 



"Refer to Attachment VIII of this report 
-Refer to Attachment IV of this report. 



45 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Item 4 - File 00-0934 

Department: 

Item: 



Amount: 
Source of Funds: 
Description: 



Public Utilities Commission (PUC) 

Hearing to consider release of reserved funds in the 
amount of $505,368 to fund removal of contaminated 
materials from PUC/Water Department bayside property, 
formerly leased to the Peninsula Sportsman's Club. 

$505,368 

Water Department Enterprise Fund 

In March of 2000 the Board of Supervisors appropriated 
$600,000 in Water Department Enterprise Fund monies 
for initial cleanup costs of 25 acres of contaminated PUC- 
owned land located on the Peninsula, west of the 
Dumbarton Bridge next to the City of East Palo Alto (File 
No. 00-0272). Of the $600,000, $505,368 was placed on 
reserve, pending selection of a contractor and submission 
of budget details. 

The subject land became contaminated with lead and 
other toxins between 1939 and 1994 when Peninsula 
Sportsman's Club, which operated a trap and skeet range 
on the subject property, leased the property from the 
PUC. In 1994 the San Francisco Bay Regional Water 
Control Board issued a cleanup and abatement order to 
the Peninsula Sportsman's Club, and as the property 
owner, PUC was named the secondary responsible party. 
In 1996 the PUC evicted the Peninsula Sportsman's Club 
from the subject property and shortly afterward, the 
Peninsula Sportsman's Club declared bankruptcy, leaving 
no recoverable assets. PUC became solely responsible for 
the cleanup of the property. Due to administrative 
delays, the Regional Water Control Board pursued the 
cleanup and abatement order from the time the Peninsula 
Sportsman's Club was evicted in 1996 until July of 1999. 
In July of 1999 the Regional Water Control Board issued 
a letter to the PUC, requiring the PUC to begin the 
cleanup. 

The PUC has begun the process of complying with the 
Regional Water Control Board's enforcement action. PUC 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

46 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



estimates that total cleanup costs and wetlands 
restoration will be up to $10,000,000 over a three-year 
period. Initial cleanup costs are estimated to be 
$3,100,000, of which $600,000 was appropriated by the 
Board of Supervisors in March of 2000 and $2,500,000 
was included in the FY 2000-2001 PUC budget. 

The first clean-up project includes the removal of 5,000 
cubic yards of clay pigeon debris from the subject 
property. This project was identified as a priority because 
the debris is contaminated with lead and other toxins. 
PUC is requesting release of reserved funds in the 
amount of $505,368 to fund removal and disposal of 5,000 
cubic yards of contaminated materials from the subject 
site. 



Budget: 



The summary budget for the proposed work, totaling 
$669,097, which includes $505,368 of reserved funds plus 
$163,729 of funds available in the FY 2000-2001 PUC 
Capital Improvement Project budget is as follows: 



Mobilization and demolition of site 1 


$121,891 


Removal/screening of contaminated soil 


81,000 


On-site waste stabilization 


95,400 


Contaminated material transportation 


215,780 


Contaminated material disposal 


136,592 


Decontamination water disposal 


6,000 


Site restoration 


12.434 


Total 


$669,097 



Comments: 



Attachment I, provided by PUC, contains details to 
support the summary budget. 

As noted in the attached memorandum provided by PUC 
(Attachment II), PUC selected Mendelian Construction, 
Inc. through a modified bid process to perform the 
removal and disposal work. In Attachment II, Mr. John 
Mundy of the PUC explains the selection process and the 
selection of Mendelian Construction based on (a) their 
approach for performing the removal and disposal of 
contaminated materials, (b) their status as a local and 



1 Mobilization includes securing equipment and preparing the site for excavation and disposal. 
Additionally, "mobdization and demolition' will include removal of obstructing trees and construction 
of a temporary road. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

47 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

minority owned business, and (c) their ability to perform 
the work in the time frame required by PUC. 

Recommendation: Approve the requested release of $505,368 in reserved 

funds. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

48 



Attachment I 



Contractors must submit three (3) copies of their complete proposal, including the Bid Schedule and Proposed 
MBE and WBE Goals. Proposals shall be hand delivered in a sealed envelope to: 

DPW - BCM/SAR 
ATTEN: Tom Anderson 
1680 Mission Street, 1st Floor 
San Francisco, CA 94103 

This Bid shall be submitted on Tuesday. August 18. 2000 by and not later than 12:00 PM 



J Bid I Bid Item Description 
Item 


Estimated 
Quantity 


Unit 


Unit Price 


Extension 


1 


Mobilization and Demolitiom 


All 


LS 




5121,891 


2 


Removal and Screening 


6,000 


Ton 


S13.50 


$81,000 


3 


On-Site Waste Stabilization 


3,000 


Ton 


S31.80 


S95.400 


4 


Contaminated Material Transportation 




a. Hazardous Waste Landfill 


3,200 


Ton 


S44.80 


S143.360 




b. Non-Hazardous Waste Landfill 


3,000 


Ton 


S24.14 


572,420 


5 


Contaminated Material Disposal 




a. Hazardous Waste Landfill 


3,200 


Ton 


S34.51 


S1 10,432 




b. Non-Hazardous Waste Landfill 


3,000 


Ton 


S8.72 


526,160 


6 


Decontamination Water Disposal 


5,000 


GAL 


S1.20 


S6.000 


7 


Site Restoration 


ALL 


LS 




S 12,434 


T 


jtal 






S569.097 



NOTES: 



1 The quality of clay pigeon waste is estimated at 4,000 cubic yards. For the purpose of this Bid, unit 

the volume was converted to unit weight using the assumed conversion value of 1.5 tons per cubic yard. 

2 Transportation and Disposal Unit weights for hazardous waste (fine fraction) was adjusted to account for 
stabilization additives. 



49 




Attachment II 
Page 1 of 2 

PUBLIC UTILITIES COMMISSION hetchhetchy 

CITY AND COUNTY OF SAN FRANCISCO water and power 

WILLIE L. BROWN, JR. SAN FRANCISCO 

MAY0 R WATER DEPARTMENT 



JOHN P. MULLANE, JR. 
GENERAL MANAGER 



SAN FRANCISCO 

CLEAN WATER PROGRAM 



August 16,2000 

TO: Sevenn Campbell, Budget Analyst's Office 

CC: Steve Medbery, PUC-SPEAC 

Bob Hickman, PUC-SPEAC 

FROM: John Mundy, PUC-SPEAC ti r^\ 

SUBJECT: Release of Reserves, Peninsula Sportsman's Club Clay Pigeon Removal 

This memo provides follow up to our recent discussions regarding contractor selection for the removal 
action planned next month at the Peninsula Sportsman's Club site. I have forwarded to your office the 
results of an informal bidding process administered through existing San Francisco Department of Public 
Works disposal contracts. As we have discussed, the scope of the clay pigeon removal project has 
expanded, as recent subsurface investigations at the site reveal the debris to extend significantly deeper 
than was first estimated. Current estimates indicate the total volume of removal to be 5,000 cubic yards. 
Our previous estimates were in the range of 2,000 cubic yards. 

Bids were received from two contractors, Mendelian Construction, Inc. and CES. The bids were 
evaluated against 5 weighted criteria, as follows: 

Experience (30%): Because of the unique technical issues associated with stabilization and disposal of 
materials at the site, it is important that the contractor have demonstrated experience specific to the work 
requested. Of the two bids, Mendelian had more experience, and has teamed with a consulting engineer 
(Kleinfelder) with experience specific to the stabilization of lead contaminated soils. CES has had no 
experience with the stabilization of lead contaminated soils. 

Project Approach (30%): Mendelian submitted a very detailed proposal, which directly addressed 
Project Goals outlined in the bid package prepared by SFPUC and SFDPW staff. Mendelian's proposal 
included process diagrams for the handling and disposal of materials at the site, and clearly identified 
key staff and their responsibilities. In contrast, the CES bid contained very little detail. Thus, it was 
very difficult to evaluate CES's project approach. 

Cost (20%): CES submitted a bid of $640,1 15.00 for the removal action. Mendelian submitted a bid for 
$669,097 for the same work. 

Schedule (10%): Mendelian has presented clear timelines for deliverables associated with the project, 
and is available to perform the work immediately. The CES proposal was not as clear about scheduling 
of work. Scheduling is a significant factor in this project, as the action must be completed before the 
coming wet season. 

Project Team (10%): Both Mendelian and CES have teamed with competent engineering consultants. 
We believe both contractors would have adequate technical support, though Mendelian's proposal does a 
better job documenting this fact. Both proposals meet or exceed MBE/WBE goals set forth in the 
SFDPW disposal contract. 

SYSTEM PLANNING, ENVIRONMENT AND COMPLIANCE 
3801 THIRD STREET, SUITE #600, SAN FRANCISCO, CA 94124 (415) 695-7310 / FAX 695-7377 

5 q PSC0420 

JM 8/17/00 



Attachment II 
Page 2 of 2 



Both SFPUC and SFDPW staff recommend that the work be awarded to Mendelian. Our reasoning is as 
follows: 

• Though Mendelian's bid came in $29,000 higher than CES, we believe they have presented a 
more thorough and detailed approach, and are thus less likely to encounter circumstances 
requiring contract modification. 

• There is some uncertainty as to whether CES would be able to complete the required work before 
the coming wet season. State regulators are now requiring that work be completed this fall. 

• Mendelian is a locally owned minority business. By awarding the work to Mendelian, we are 
promoting City goals in the area of fair hiring practices. 

SFPUC requests that the Board of Supervisors release funds currently held in reserve totaling $505,368. 
We will cover the shortfall of $163,729 through a CIP currently in place for cleanup of the remainder of 
the site. Should you have any questions regarding the information presented above, please feel free to 
call me at 415.695.7387. 



51 

scampb~l .doc 
JM 8/17/00 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Items 5 and 6 - Files 00-0741 and 00-0742 

Department: Ethics Commission 

Items: File 00-0741: Ordinance amending Article II of the 

San Francisco Campaign and Governmental Conduct 
Code by adding Section 2.160 to authorize the Ethics 
Commission to require electronic filing of lobbyist 
statements and reports. 

File 00-0742: Ordinance amending Article I of the San 
Francisco Campaign and Governmental Conduct Code 
by adding Section 1.540 to authorize the Ethics 
Commission to require electronic filing of campaign 
consultant statements and reports. 

Description: In accordance with Charter Sections C3.699-11 (2) and 

(6), and with the Campaign and Governmental 
Conduct Code, Section 1.500 et seq., the Ethics 
Commission is responsible for receiving documents 
required to be filed pursuant to the City's lobbyist and 
campaign consultant ordinances, and for making 
recommendations to the Mayor and the Board of 
Supervisors regarding ordinances related to campaign 
finance, conflict of interest, lobbying and governmental 
ethics. The proposed ordinances would authorize the 
Ethics Commission to require that lobbyists and 
campaign consultants file an electronic copy of 
statements or reports, whenever original reports or 
statements are required to be filed. Currently, the 
Ethics Commission only requires campaign finance 
reports to be filed electronically. 

Lobbyists and campaign consultants are presently 
required by the City's lobbyist and campaign 
consultant ordinances to provide the Ethics 
Commission with quarterly activity reports. Lobbyists 
must disclose payments made, or payments received 
from or promised by clients, to influence local 
legislative or administrative action. Campaign 
consultants must disclose payments they receive or are 
promised to provide for campaign management or 
strategy services to local candidates and ballot 
measures. The Ethics Commission staff then enter the 



52 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

typed or handwritten reports into a data-base system 
and prepare quarterly summaries of the activity 
reports submitted by lobbyists and campaign 
consultants. According to Ms. Ginny Vida of the Ethics 
Commission, each quarter, Ethics Commission staff 
spends approximately three weeks preparing the 
lobbyist summary reports and one week to ten days 
preparing the campaign consultant summary report, 
or a total of approximately four months annually. 
These summary reports are available to the general 
public at the Ethics Commission's office and on its 
website. 

The proposed ordinances would authorize the Ethics 
Commission to require lobbyists and campaign 
consultants to prepare the quarterly activity reports 
electronically and to convey them to the Ethics 
Commission. The Ethics Commission's Electronic 
Filing system would be capable of compiling the 
information submitted by filers and preparing the 
Ethics Commission's quarterly summary reports, thus 
saving the Ethics Commission approximately four 
months of staff time annually and speeding the 
delivery of the reports to the public. 

Comments: 1. Ms. Vida advises that the City's laws regulating 

lobbyists and campaign consultants have been moved 
from the City's Administrative Code to a new 
Campaign and Governmental Conduct Code. 
Therefore, the proposed ordinances amend the new 
Campaign and Governmental Conduct Code Sections. 

2. The Ethics Commission budgeted $50,000 for the 
development and implementation of the Electronic 
Filing system for lobbyists and campaign consultants 
in FY 1999-2000. Ms. Vida advises that none of these 
funds were spent in FY 1999-2000 and these funds 
have now been carried forward to FY 2000-01. The 
Department of Telecommunications and Information 
Services (DTIS) will begin development of the 
Electronic Filing system in January 2001. According 
to Ms. Maria Gartner of DTIS, the system should be 
implemented, tested and ready for use by June 30, 
2001. In addition to the $50,000 for development and 
implementation of the Electronic Filing system, the 



53 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Ethics Commission currently has a $25,000 account 
with DTIS for routine systems maintenance. Ms. 
Gartner advises that because DTIS has increased their 
rates for technical support, the current annual amount 
of $25,000 may not be sufficient for the Ethics 
Commission's future systems needs and she estimates 
that the Ethics Commission will require an additional 
$10,000 for maintenance of the new Electronic Filing 
system as well as other system enhancements 
beginning in FY 2001-02. 

3. As noted above, if lobbyists and campaign 
consultants are required to file their quarterly reports 
electronically, approximately four months of the Ethics 
Commission staff time will be saved. Ms. Vida reports 
that although there would not be a direct cost savings 
for the Ethics Commission, the Deputy Director would 
then be able to spend the additional free time to 
develop and revise ethics policies, such as new codes of 
conduct for City departments. In addition, Ms. Vida 
reports that the Ethics Commission Investigator/Legal 
Analyst would have additional time to pursue 
investigations and make presentations to the public on 
ethics laws and regulations. 

4. If the proposed legislation is approved authorizing 
the Ethics Commission to require Electronic Filing of 
lobbyist and campaign consultant reports, Ms. Vida 
states that those lobbyists and campaign consultants 
who do not have access to a computer could use 
available computers with Internet capabilities at the 
Public Library or at the Office of the Ethics 
Commission. Ms. Vida reports that the Ethics 
Commission will have two computers available for the 
public's use by the beginning of 2001. The Ethics 
Commission will also offer training sessions to 
lobbyists and campaign consultants to familiarize 
them with the proposed new Electronic Filing system. 

Recommendation: Approval of the proposed ordinances is a policy matter 
for the Board of Supervisors. 



54 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Item 7 - File 00-1417 



Department: 
Item: 



Location: 

Purpose of Lease: 

Lessor: 

Lessee: 

No. of Sq. Ft. and 
Cost Per Month: 

Base Rent: 



Port 

Ordinance approving the Fourth Amendment to the 
Lease Agreement with Kira Mikagon and the City 
and County of San Francisco operating by and 
through the San Francisco Port Commission for Pier 
33 South, at Bay Street and the Embarcadero. 

Pier 33 South, at Bay Street and the Embarcadero 

Modification of an existing Lease agreement 

Port 

Kira Mikagon, an individual 

12,900 square feet of restaurant, bar, and office 
space 

Minimum base rent is equal to $4,633 monthly or 
$55,596 annually. The proposed Lease amendment 
adds that, effective June 13, 2000 and on each 
anniversary date during the remaining term of the 
Lease, the minimum monthly base rent shall be 
increased by the greater of (a) the Consumer Price 
Index (CPI) or (b) an amount equal to one-twelfth of 
the annual percentage rent for the preceding Lease 
year (see below). 



Percentage Rent: 



In addition to the minimum base rent noted above, 
the tenant shall pay to the Port percentage rent in 
an amount equal to 30 percent of gross receipts 1 in 
excess of $27,500 per month or $330,000 per year. As 
noted above, the base monthly rent would increase 
each year by an amount equal to the CPI or by an 
amount equal to one-twelfth of the annual 
percentage rent, whichever is greater. The proposed 
Lease amendment further adds that, if the base rent 
is adjusted upward by an amount equal to one- 



1 Gross receipts include all amounts received and receivable from all sales and business 
transacted or services performed on the premises. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

55 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



twelfth of the annual percentage rent, then the 
percentage rent threshold of $27,500 will be adjusted 
upward. For example, if the annual percentage rent 
(which is equal to 30 percent of gross receipts in 
excess of $27,500 monthly or $330,000 annually) is 
$10,800, then the percentage threshold of $27,500 
monthly would be adjusted upward by the formula: 
$10,800 divided by 0.3 divided by 12 equals $3,000. 
Therefore, the new percentage threshold would 
increase to $30,500 ($27,500 plus $3,000). 



Utilities and Janitor 

Provided by Lessor: Paid by tenant 



Term of Lease: 



Description: 



30-year Lease, commencing June 
terminating June 12, 2014 



13, 1984 and 



The subject Lease was originally approved by the 
Board of Supervisors in 1980 for a 30 year period, 
commencing September 1, 1981 through August 31, 
2011. The original Lease agreement between the 
Port and Embarcadero Enterprises, Inc., a private 
corporation, was a ground lease for 3,743 square feet 
of space to be used as a restaurant and bar at Pier 33 
South. In 1983 the Board of Supervisors approved 
assignment of the existing Lease between the Port 
and Embarcadero Enterprises to Pier 33, Inc. 
(Assignment and First Amendment of Lease). The 
First Amendment increased the first restaurant and 
bar space by 797 square feet, from 3,743 to 4,540 
square feet, and added an additional 3,700 square 
feet of second floor office space, for a total of 8,240 
square feet of leased space. In 1984 the Board of 
Supervisors approved a second amendment of the 
Lease (Second Amendment of Lease), which 
increased the amount of Leased space by 4,660 
square feet, from 8,240 square feet to 12,900 square 
feet, to include additional office space in addition to 
the existing office, restaurant and bar space, and 
amended the Lease to provide for a 30 year Lease 
period, from June 13, 1984 through June 12, 2014. 
In 1995 the Board of Supervisors approved a third 
Lease amendment (Third Amendment of Lease) 
which authorized the existing Leaseholder, Pier 33, 
Inc. to obtain a loan to be secured by a mortgage on 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

56 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



the leasehold interest. Under the Third Amendment, 
the Port has the authority to terminate the Lease, 
with 12-month notice, if the Port should need the 
subject property for a Port program or project. In 
order to exercise the termination right, the Port 
would be required to pay a "termination fee" to the 
institution which provided the loan secured by the 
leasehold interest equal to the then outstanding 
principal balance of the loan. The Third Amendment 
capped the Port's obligation to pay the termination 
fee at $546,000. However, the Third Amendment did 
not specify if the loan secured by the leasehold 
interest would be a fully-amortized loan 2 or an 
interest-only loan. If the loan were an interest-only 
loan, the Port's obligation to pay the outstanding 
principal balance would be greater than if the loan 
were a fully-amortized loan. Although the loan 
anticipated by the Third Amendment was never 
funded, the Third Amendment is still in effect. 

This proposed ordinance would approve the Fourth 
Amendment of the Lease. The Fourth Amendment 
would re-assign the subject Lease from the present 
leaseholder, Pier 33, Inc., to a new leaseholder, Kira 
Mikagon, an individual. Additionally, the Fourth 
Amendment would amend the language allowing the 
leaseholder to secure a loan on the subject leasehold 
interest to apply only to loans obtained after May 15 
and prior to October 1, 2000. Under the proposed 
Fourth Amendment, the Port would have the right to 
terminate the Lease with 12-month notice if the 
subject property is needed for other Port projects. 
The Port would pay a termination fee of no more 
than $546,000, which is the identical amount of the 
termination fee previously approved by the Board of 
Supervisors in a prior Lease amendment. The 
Fourth Amendment differs from the Third 
Amendment by limiting the amount of the 
termination fee to an amount equal to the principal 
outstanding balance of a fully-amortized loan and 
not an interest only loan. Therefore, the Port's costs 
would be less because the outstanding principal 



2 Payments on a fully-amortized loan include both principal and interest, thereby reducing 
the outstanding principal balance, and payments on an interest-only loan include only 
interest, thereby not reducing the outstanding principal balance. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

57 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

balance of a fully-amortized loan, which pays down 
both the interest and the principal amount of the 
loan, would be less than the outstanding principal 
balance of an interest-only loan, which pays the 
interest but does not reduce the principal balance. 

Comments: 1. Mr. Nicolas Dempsey of the Port states that the 

proposed Fourth Amendment would assign the Lease 
to Kira Mikagon as Master Tenant. Ms. Mikagon 
would sublease the subject property to the existing 
restaurant (White Hall Tavern) and 4 office 
subtenants (Black Rocket Advertising, which 
occupies the majority of the space, two law firms, and 
one independent bank broker). According to Mr. 
Dempsey, Ms. Mikagon has purchased the leasehold 
interest for a purchase price of $750,000 and has 
financed $586,000 or 78 percent of the purchase 
amount. As noted above, the Port would pay a 
termination fee of no more than $546,000 of a fully- 
amortized loan if the Port were to terminate the 
Lease for a Port project. According to Mr. Dempsey, 
the Port does not currently have a planned Port 
project for the subject site but retains its right to 
take over the subject site for a Port project under the 
Fourth Amendment. 

2. The Fourth Amendment differs from the Third 
Amendment in that it increases the minimum rent 
payable to the Port in each year by an amount which 
is proportional to the total percentage rent, as noted 
above. Mr. Dempsey states that this benefits the 
Port because it protects the Port from any cash flow 
loss resulting from an economic downturn. Mr. 
Dempsey advises that, to date only the required 
minimum base rent has been paid to the Port and 
that no percentage rent has been paid to the Port by 
the prior tenant, Pier 33, Inc. because the gross 
receipts from the restaurant, bar, and office space 
have been less than $27,500 per month. Mr. 
Dempsey advises that many of the office space 
subleases will expire in FY 2000-2001 and that office 
space rent will increase from the current average 
rent of $1.00 per square foot to the market rate rent 
of $3.50 to $4.00 per square foot. Therefore, Mr. 
Dempsey says that the Port anticipates increased 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

58 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



percentage rent revenue in FY 2000-2001. Mr. 
Dempsey does not have an estimate of the increased 
rent at this time. 

Additionally, the percentage rent threshold would 
increase each year by an amount proportional to the 
total percentage rent that has been paid, as noted 
previously. Therefore, an increase in the minimum 
base rent based upon the percentage rent that has 
been paid would be offset to some extent by an 
increase in the percentage rent threshold. Rental 
revenues to the Port would be less than if the 
percentage rent threshold were not increased. 

3. Additionally, the Fourth Amendment adds a 
"Damage and Destruction" clause that states that 
the Port shall repair the premises or the facility if 
they are damaged by fire or other casualty, provided 
that funds for such repairs have been appropriated 
by the Port and the Board of Supervisors. The 
subject Lease would remain in full force during the 
period of repair, except that the tenant would be 
entitled to a proportionate reduction in the base rent, 
based on the extent of the damage. Under the terms 
of the subject Lease, the Port's repair costs would be 
limited because the tenant is required to maintain 
fire insurance which covers all tenant improvements 
at the subject site and provides at least 90 percent 
replacement value for any damage incurred. The 
Lease also requires that the tenant place all funds 
received from an insurance policy for any damage 
incurred in a trust account held jointly by the Port 
and tenant, and that all funds would be used solely 
for repair and replacement of the tenant 
improvements to the premises. Mr. Dempsey states 
that the proposed "damage and destruction" clause 
requires the Port to repair damage resulting from 
damage or casualty only to the Port structure not 
covered by the tenant's insurance and not to tenant 
improvements. Additionally, Mr. Dempsey states 
that the Port is required to repair damage only if 
funds have been appropriated for that purpose by the 
Board of Supervisors. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

59 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



4. Finally, the proposed Fourth Amendment 
incorporates the new City requirements 
implemented since the prior Lease amendment, 
including non-discrimination and equal benefits, 
tropical hardwood ban, pesticides prohibition, 
Burma/Myanmar business prohibition, and first 
source hiring clauses. 

5. In summary, the proposed Fourth Amendment to 
the Lease would: 

(a) reassign the leasehold interest from Pier 33, Inc. 
to Kira Mikagon; 

(b) change the base monthly rent escalation each 
year to the greater of the CPI or one-twelfth of 
the annual percentage rent; 

(c) change the percentage rent threshold to an 
amount equal to the annual percentage rent 
divided by 0.3 divided by 12, if the base monthly 
rent has been adjusted by one-twelfth of the 
annual percentage rent; 

(d) limit the Port's obligation to pay a termination 
fee for terminating the lease to an amount equal 
to the outstanding principal loan balance of a 
fully-amortized loan; 

(e) include a new "damage and destruction" clause, 
stating that the Port is required to repair damage 
caused by fire or casualty to the subject property 
only if funds for such repair have been 
appropriated by the Board of Supervisors; and 

(f) incorporate the new City requirements for non- 
discrimination and equal benefits, tropical 
hardwood ban, pesticides prohibition, 
Burma/Myanmar business prohibition, and first 
source hiring clauses. 



Recommendation: Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

60 



Memo to Finance Committee 

August 23, 2000 Finance Committee Meeting 



Items 8. 9 and 10- Files 00-1482. 00-1483 and 00-1484 

The proposed ordinances would establish the Fiscal Year 2000-2001 Property 
Tax rates for the City and County of San Francisco including the Bay Area Air 
Quality Management District and the Bay Area Rapid Transit District (BARTD - 
File 00-1482), for the San Francisco Unified School District (File 00-1483) and for 
the San Francisco Community College District (File 00-1484). The Property Tax 
rate proposed for the City and County of San Francisco is $1.00 per $100 of assessed 
valuation which is the maximum allowable rate. The total Property Tax rate of 
$1,136 per $100 of assessed value for Fiscal Year 2000-2001 for all of the 
jurisdictions named above, as calculated by the Controller, includes bond interest 
and redemption charges. The proposed Fiscal Year 2000-2001 Property Tax rate of 
$1,136 .is an increase of $0,007 from the Fiscal Year 1999-2000 Tax rate of $1,129. 

The Fiscal Year 1999-2000 approved Property Tax rates and the Fiscal Year 
2000-2001 proposed Property Tax rates are as follows: 








Approved 


Proposed 






Fiscal Year 


Fiscal Year 






1999-2000 


2000-2001 


Increase 




Rates 


Rates 


(Decrease) 


Citv and County of San Francisco: 








General Fund 


0.57739620 


0.57739620 


- 


Children's Fund 


0.02500000 


0.02500000 


- 


Open Space Acquisition Fund 


0.02500000 


0.02500000 


- 


County Superint. of Schools 


0.00097335 


0.00097335 


- 


Library Preservation Fund 


0.02500000 


0.02500000 


- 


S.F. Unified School District 


0.28485725 


0.28485725 


- 


S.F. Community College District 


0.05336253 


0.05336253 


- 


Bay Area Air Quality Management 


0.00208539 


0.00208539 


- 


District 








Bay Area Rapid Transit District 


0.00632528 


0.00632528 


- 


Subtotal, General Fund Tax Rate 


$1.00 


SI. 00 


$0.00 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

61 



Memo to Finance Committee 

August 23, 2000 Finance Committee Meeting 



Property Tax Rates (Continued) 



Rates for Bonded Indebtedness 

City and County of San Francisco 
S. F. Unified School District 
Subtotal, Bonded Indebtedness 

Total Combined Tax Rate 



Approved 

Fiscal Year 

1999-2000 

Rates 



$0.12766122 
0.00133878 
$0,129 



Proposed 

Fiscal Year 

2000-2001 

Rates 



$0.1348136 
0.0011864 
$0,136 



$ 1.129 



$ 1.136 



Increase 
(Decrease) 



$ 0.0072 
(0.00021 
$ 0.0070 

$0,007 



As compared with the current Fiscal Year 1999-2000 Property Tax rate of 
$1,129, the Fiscal Year 2000-2001 proposed $1,136 Property Tax rate will have the 
following effect on a tax bill for a single family residence assessed at $400,000: 

Fiscal Year 
1999-2000 

Assessed Value $400,000 

Less Homeowners Exemption 7.000 

Total $393,000 divided by $100 x $1,129 = $4,436.97 

Fiscal Year 
2000-2001 

Assessed Value (1999-2000) $400,000 
Add 2% Cost of Living Increase 8.000 

Subtotal $408,000 

Less Homeowners Exemption 7,000 

Total $401,000 divided by $100 x $1,136 = $4,555.36 



Net increase in Property Tax Bill for Fiscal Year 2000-2001 



$ 118.39 



As shown above, homeowners of a single family residence, assessed at $400,000, 
would experience a cost of living increase of 2 percent, as allowed under Proposition 
13 for Fiscal Year 2000-2001. In the example reflected above, the cost of living 
increase, combined with the increased rate for bonded indebtedness, results in a 
Property Tax increase of $118.39 Fiscal Year 2000-2001 as compared to Fiscal Year 
1999-2000. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

62 



Memo to Finance Committee 

August 23, 2000 Finance Committee Meeting 



Section 37.3 (6) of the Administrative Code (the Residential Rent Stabilization and 
Arbitration Ordinance) allows landlords to pass through to tenants that portion of 
property taxes attributable to the City's General Obligation bonds approved by 
voters between November 1, 1996 and November 30, 1998. For Fiscal Year 2000- 
2001, the passthrough rate as determined by the Controller is $0,023 per $100 of 
assessed value, or 2.3 cents per $100 of assessed value. This passthrough rate of 
$0,023 is $0,007 more than the $0,016 passthrough rate in FY 1999-2000. 
Landlords must comply with the Rent Board's procedures to be eligible for 
passthrough provisions. 

Recommendation 

Approve the proposed ordinances. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

63 






Memo to Finance Committee 

August 23, 2000 Finance Committee Meeting 

Item 11 - File 00-1485 

The proposed ordinance would amend the previously approved Fiscal 
Year 2000-2001 Annual Appropriation Ordinance (AAO) as a prerequisite to 
the levy of the Property Tax rate. The proposed ordinance would amend the 
Fiscal Year 2000-2001 AAO to increase previously appropriated funds in the 
amount of $36,782 to the Art Commission for the Municipal Symphony 
Orchestra (one-eighth of one cent per $100 of assessed valuation) as required 
by Charter Section 16.106(1). 

Comment 

The Fiscal Year 2000-2001 budget presently includes $889,144 for the 
Art Commission expenditures for the Municipal Symphony Orchestra. The 
proposed ordinance would increase this appropriation by $36,782 to $925,926 
for Fiscal Year 2000-2001. 

Recommendation 

Approve the proposed ordinance. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

64 



Memo to Finance and Labor Committee 

August 22, 2000 Finance and Labor Committee Meeting 

Item 12 - File 00-1452 



Department: 
Item: 

Description: 



Controller 

Resolution establishing the City and County's 
appropriations limit for FY 2000-2001 pursuant to Article 
XIII B of the California Constitution. 

The proposed resolution would establish $1,569,917,337 
as the FY 2000-2001 adjusted appropriation limit or Gann 
spending limit for the City and County of San Francisco 
as required by Article XIII B of the California 
Constitution. 

On November 6, 1979, California voters approved 
Proposition 4, known as the Gann Initiative, which added 
Article XIII B to the California Constitution. Article XIII 
B limits the growth of appropriations from the proceeds of 
taxes of the State of California and local governments to 
the percentage of change in population and the lesser of 
the percentage change in the cost of living or in per capita 
personal income. The State Government Code requires 
that each local government establish its appropriation 
limit (Gann Limit) by resolution each year. 

The Controller has computed the 2000-2001 Gann Limit 
for the City and County of San Francisco as follows 
(percentages and computed amount have been rounded by 
the Controller): 



FY 1999-2000 Gross Gann Limit 

Adjusted by : 

Increase in Cost of Living 
Increase in Population 



$1,477,821,483 



4.91% 
1.26% 



FY 2000-2001 Net Gann Limit $1,569,917,337* 

M.0491 times 1.0126 equals 1.062319 times $1,477,821,483. 

The Controller's Office monitors revenues affected by the 
Gann Limit throughout the year. At year-end, a final 
computation is prepared comparing actual proceeds of taxes 
to the Gann Limit. At that time, two tests must be met. 
First, all actual proceeds of taxes must be below the Gann 
Limit; and second, all actual proceeds of taxes collected 

Board of Supervisors 

Budget Analyst 

65 






Memo to Finance and Labor Committee 

August 22, 2000 Finance and Labor Committee Meeting 

must be appropriated. If either test is not met, according to 
Article XIII B, excess revenues collected must be returned 
to the taxpayers within two years. 

The amount appropriated in the City's FY 2000-2001 
budget that is subject to the Gann Limit is $1,418,401,573 
which is $151,515,764 less than the net FY 2000-2001 
Gann Limit of $1,569,917,337. In accordance with the 
Annual Appropriation Ordinance, any FY 2000-2001 tax 
proceeds in excess of current estimates will be appropriated 
to the City's General Fund General Reserve, which is used 
as a revenue source (a) to fund supplemental 
appropriations during the current fiscal year and (b) to 
fund the City's budget for the next fiscal year. 

Comments: 1. The Gann Limit was first applied in 1980-81 using the 

actual 1978-79 appropriations that would have been 
subject to the limit, had it existed then, as the base year 
(as called for by Article XIII B of the California 
Constitution). The 1978-79 base was adjusted for changes 
in per capita personal income, cost of living and 
population to obtain the 1980-81 limit. In each successive 
year, the prior year's limit was used as the base for 
computation of the new limit. 

2. State Proposition 111, approved by the voters in June 
1990, made several changes to the Article XIII B (3) which 
are reflected in the City's computations including an 
adjustment to exclude appropriations for "Qualified 
Capital Outlay as defined by the legislature" from 
proceeds of taxes. This results in a reduction of 
$26,107,002 for FY 2000-2001, from appropriations of 
proceeds of taxes subject to the limit. 

3. Based on the City Attorney's memorandum of opinion 
of June 14, 1988, the City is excluding Court and Federal 
mandates from appropriations subject to the 
appropriations limit. The City Attorney's Office has 
previously advised that the exclusion of Court and 
Federal mandates is consistent with the meaning of 
Article XIII B. No previous legal challenges have been 
filed questioning this interpretation. The two mandates 
for FY 2000-2001 totaling $8,318,587, that are identified 



Board of Supervisors 

Budget Analyst 

66 



Memo to Finance and Labor Committee 

August 22, 2000 Finance and Labor Committee Meeting 

by a survey of all City departments and verified by the 
Controller's Office, are as follows: 

Federal Resource Conservation Act (Toxics) $ 3,990,959 
Jail Overcrowding 4.327.628 

Total Court and Federal Mandates $ 8,318,587 

Recommendation: Approve the proposed resolution. 



Board of Supervisors 
Budget Analyst 
67 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Items 13 and 14 - Files 00-1265 and 00-1267 



Note: File 00-1265 is scheduled to be heard by the Transportation and Land Use 
Committee at its meeting of August 22, 2000. This proposed resolution must 
also be considered by the Finance and Labor Committee because the 
California Environmental Quality Act (CEQA) requires that before a public 
agency takes any action to approve a development project (in this case, File 
00-1267), that agency must first make CEQA findings (in this case, as 
contained in File 00-1265). 

Departments: Department of Administrative Services, Real Estate Division 

Department of City Planning 

Mayor's Office of Business and Economic Development 
Redevelopment Agency 

Item: Item 13. File 00-1265: Resolution affirming the certification 

of the Yerba Buena Redevelopment Project Area 
Expansion/Emporium Site Development Final Supplemental 
Environmental Impact Report by the Planning and 
Redevelopment Agency Commissions, and adopting 
environmental findings (and a statement of overriding 
considerations) pursuant to the California Environmental 
Quality Act and State Guidelines in connection with adoption 
of the Yerba Buena Redevelopment Project Area 
Expansion/Emporium Site Development Project, and various 
other actions necessary to implement the project. 

Item 14. File 00-1267: Resolution approving and authorizing 
a Tax Increment Allocation Pledge Agreement between the 
City and County of San Francisco and the Redevelopment 
Agency, under which the City agrees to a pledge by the 
Redevelopment Agency of a portion of the available non- 
housing tax increment generated by the redevelopment of the 
project site (specifically including Assessor's Block 3705, Lots 
9, 10, 12, 13, 14, 15, 17, 18, 33, 38, and 43) in favor of 
Emporium Development, L.L.C., a subsidiary of Forest City 
Enterprises, Inc. in furtherance of the implementation of the 
Redevelopment Plan amendment for the addition of the 
Emporium Site Area to the Yerba Buena Center Project 
Area; approving and authorizing a financing agreement and 
covenant to operate in connection with the development of 
the Emporium Site Area; approving an allocation of tax 
increment for affordable housing purposes in excess of the 
minimum amount required under Redevelopment Law; 

Board of Supervisors 
Budget Analyst 

68 









Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

making elections with respect to the allocation of tax 
increment; adopting findings pursuant to the California 
Environmental Quality Act; and adopting findings that the 
agreement is consistent with the City's General Plan and 
Eight Priority Policies of City Planning Code Section 101.1. 

Description of 

the Project: Emporium Development, L.L.C. (the Developer) 1 has 

proposed redeveloping the site of the former Emporium 
Building and adjacent warehouses and office buildings (the 
Project Site Area) as a multi-story, multi-use complex with 
rerouted portions of Jessie Street on either side of it (the 
Project). The proposed 1,607,000 gross square foot complex 
would comprise: 

• A shopping galleria (up to approximately 505,000 square 
feet), anchored by a new Bloomingdale's Department 
Store (an additional 375,000 square feet), for up to a total 
of approximately 880,000 square feet. 

• Entertainment, restaurant, and cinema space (up to 
approximately 115,000 square feet). 

• Office space (up to approximately 237,000 square feet). 

• A 465-room hotel tower (up to approximately 375,000 
square feet). 

Construction of the Project is scheduled to take 28 months, 
commencing in December of 2000 for completion by March of 
2003. In addition to the construction of the proposed 
1,607,000 square foot complex described above, construction 
would involve: 

• Restoring historically significant portions of the former 
Emporium Building, which is considered to be a 
significant building under Objective 12 of the Downtown 
Plan Element of the General Plan. The proposed Project 
would preserve the following elements of the Emporium 
Building: its Market Street facade, much of the front 65 
feet of the building (which would require seismic 
upgrading), the dome, and the rotunda. The remainder 



1 Emporium Development, L.L.C. is a California limited liability company which is ultimately 
controlled by Forest City Enterprises, Inc., a publicly traded Ohio corporation with assets in excess of 
$3,500,000,000. 

Board of Supervisors 
Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

of the Emporium Building and other existing structures 
in the Project Site Area would be demolished. 
• Constructing underground links to the Powell Street 
MUNI and BART station. 

With regard to the hotel component of the Project, according 
to Mr. Jesse Smith of the City Attorney's Office, the 
Developer would be required to build a pad for the hotel 
above the Mission Street retail/entertainment portion of the 
complex, and to use its best efforts to cause the hotel to be 
built. According to Mr. Smith and Mr. Kevin Warner of the 
Redevelopment Agency, the Developer has the following four 
main options in order to satisfy a condition to closing the 
combined Owner Participation and Disposition and 
Development Agreement (OPA/DDA): 

(1) It could lease or sell the airspace to a separate hotel 
developer to construct the hotel (the most likely option) 2 . 
In this case, the Redevelopment Agency has the right to 
review the binding agreements between the Developer 
and the separate hotel developer for consistency with 
the OPA/DDA as a condition to closing. 

(2) The Developer's parent company, Forest City 
Enterprises, Inc., could establish its own hotel developer 
subsidiary company to construct the hotel. 

(3) The Developer could construct the hotel itself. 

(4) The least likely option is that no hotel could be 
constructed. The last three options would require the 
Redevelopment Agency's approval before the closing 
could occur. According to Mr. Smith, under the 
proposed CEQA findings and assorted expert economic 
analyses, a reduced development proposal which does 
not include a hotel is deemed financially infeasible. 
Furthermore, according to Mr. Smith, the Developer has 
a significant financial incentive to ensure that the hotel 
is built because, among other things, if it was not built, 



2 According to Mr. Warner, it is estimated that the air space lease cost to a separate hotel developer 
would be either $1,125,000 per year during the Project's construction and $1,600,000 per year after 
the Project's opening, or a one-time sale price of at least $13,333,333 prior to the end of the 
development costs determination period (which would provide a minimum 12 percent to the 
Developer of approximately $1,600,000 per year). The development costs determination period is the 
period ending upon the earlier of (a) the first day of the first month after 95 percent of the mixed-use 
portion of the complex's space is leased and occupied, or (b) the end of the third year after the 
Project's opening. 

Board of Supervisors 
Budget Analyst 

70 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



the net available Property Tax increment contribution 
from the Redevelopment Agency would be substantially 
reduced. 

The hotel could include up to 60 "interval ownership units" 
which are luxury suites with kitchen facilities. Fractional 
interests in these units would be sold in advance with 
occupancy rights for transient use over specific periods of 
time. According to Mr. Smith, the decision to develop such 
units would be a private matter between the Developer and 
the hotel developer, subject to the requirements of the Yerba 
Buena Center Redevelopment Plan and related plan 
documents (including the OPA/DDA). However, it is highly 
likely that such presold units would be built because they 
would provide the hotel developer with stable income. 
Furthermore, such units could be sold as residential 
condominium units if the criteria for parking, open space, 
and affordable housing specified in the proposed Yerba 
Buena Center Redevelopment Plan are met 3 . Approximately 
16,100 square feet of the Project would be publicly accessible 
open space both inside the complex and on its roof. If the 
Project incorporates residential condominium units, 
additional open space would be provided for the residents. 

Although the total parking requirement for the proposed 
Project has been estimated to be 1,330 spaces, no space has 
been set aside for parking because, according to the 
Environmental Impact Report prepared for the Project, 
parking shortfalls relative to demand are not considered 
significant environmental effects in the urban context of San 
Francisco. The proposal assumes that: 

• Based on economic analyses commissioned by the 
Developer (reviewed and determined to be reasonable and 
accurate by a real estate economic consulting firm, Keyser 
Marston Associates, on behalf of the City and the 
Redevelopment Agency), construction of underground 
parking would be economically infeasible. 



3 If such a conversion takes place, the Developer (or the hotel developer) is liable for aU development 
fees and exactions which would apply if such residential condominium units had been built outside of 
the redevelopment area. According to Mr. Smith and Mr. Warner, if the Redevelopment Agency's 
standard 20 percent requirement for affordable housing would require a greater in lieu payment, or 
the development of more affordable housing, than would be required by the Planning Code's 
affordable housing requirements, then the Redevelopment Agency's requirement would govern. 

Board of Supervisors 
Budget Analyst 

71 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

• The Project Site Area is located next to a public transit 
hub, and the City has a transit first policy. 

• The adjacent parking building at Fifth and Mission 
Streets has some spare capacity 4 and DPT is examining 
possible expansion of that garage and other ways to add 
parking capacity nearby. 

• Under the proposed mitigation monitoring program and 
the OPA/DDA, the Developer would be responsible for 
developing and implementing transportation initiatives 
for customers and employees. 

• According to the Transportation Authority, the real traffic 
congestion problem in the South of Market Area is 
freeway access, not availability of parking. 

The Budget Analyst notes that other current and projected 
downtown developments (including the Ferry Building 
renovation, the Pier 1 development, MUNI's hotel project at 
Mission and Steuart Streets, and the Moscone Convention 
Center expansion) also do not propose to construct new 
parking spaces in the downtown area. If the interval 
ownership units in the hotel are converted to residential 
condominium units, the Developer would be required to 
either: 

(a) Provide one parking space for every four residential 
condominium units if such parking spaces are located 
within 600 feet of the Project, or one parking space for 
every two residential condominium units if such parking 
spaces are located elsewhere in the South of Market 
Area. According to Mr. Smith, these allocations meet 
the requirements of the Planning Code (which does not 
require one parking space per residential condominium 
unit); or, 

(b) Pay an in-lieu fee to the City in an amount equal to 
what it would cost the City to build the required number 
of parking spaces on City property, up to a cap of $8,333 



4 According to Mr. Ron Szeto of DPT, peak capacity for the parking garage at Fifth and Mission 
Streets occurs around 1 pm. In July of 2000, 1 pm peak capacity was an average of 75-85 percent on 
Sundays through Fridays, and an average of 95-98 percent on Saturdays. In January of 2000, 1 pm 
peak capacity was an average of 65-85 percent. During major conventions at the Moscone 
Convention Center (approximately 20 to 25 days per year), the garage can provide up to 105 percent 
capacity, due to the provision of a valet parking service. During these periods, DPT also coordinates 
with other garages in the area to maximize capacity. This information is consistent with the survey 
performed by transportation consultant Wilbur Smith for the Developer, according to Mr. Smith. 

Board of Supervisors 
Budget Analyst 

72 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

per unit for a maximum of 60 units ($500,000), based on 
the number of units the Developer or hotel developer 
elects to convert. 

Description of 
the Emporium 

Site Area: The approximately 6.77 acre Emporium Site Area comprises 

a number of land parcels: 

• The former Emporium Building at 835 Market Street and 
adjacent warehouses and office buildings presently owned 
by Bloomingdale's, Inc. (Assessor's Block 3705, Lots 13, 
14, 15, 17, 18, 33, 38 and 43). 

• Buildings owned or held under option by the Developer 
(Assessor's Block 3705, Lots 9, 10 and 12). 

• A 15,420 square foot portion of the 33,023 square foot 
section of Jessie Street which runs east-west between 
Fourth Street and Fifth Street to be vacated and sold by 
the City, through the Redevelopment Agency, to the 
Developer for $3,100,000. 

• An approximately 100,000 square foot portion of Mission 
Street extending to the Mission Street wall of the parking 
garage at Fifth and Mission Streets. 

Of the Emporium Site Area's 6.77 acres, 4.48 acres form the 
Project Site Area on which the complex and the rerouted 
portions of Jessie Street would actually be built (Assessor's 
Block 3705, Lots 9, 10, 12, 13, 14, 15, 17, 18, 33, 38 and 43, 
and the subject portion of Jessie Street). 

Attachment I is a map of the various parcels of land which 
comprise the Emporium Site Area. Attachment II is a plan 
of the Project complex and the proposed configuration of 
Jessie Streets West and East immediately adjacent to the 
complex. Attachment III is a map showing the geographic 
relationship between the Emporium Site Area and the Yerba 
Buena Center Redevelopment Project Area. 

In FY 2000-01, all of the above parcels of land (including the 
current buildings) combined are assessed for Property Tax 
purposes at $69,992,515. 

An economic analysis performed by a private real estate 
economics consulting firm, the Sedway Group (for the 

Board of Supervisors 
Budget Analyst 

73 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Developer), and reviewed and determined to be reasonable 
and accurate by Keyser Marston Associates, Inc. (on behalf of 
the City and the Redevelopment Agency), found that the 
portion of the Emporium Site Area on which the Emporium 
Building and the Emporium Annex are located (Assessor's 
Block 3705, Lots 38 and 43) would have substantial value, 
perhaps $26,000,000 or more, in their own right if the land 
were unencumbered by the requirement to restore the 
historic Emporium Building. However, the Sedway Group 
determined that Lots 38 and 43 have a negative value, even 
if all of the transferable development rights originally 
associated with the site and potential historic tax credits are 
taken into account, because the cost of preserving and 
restoring the historic building exceeds the value of the 
renovated building. The Sedway Group concluded that there 
is no economic incentive for a property owner or developer to 
pursue another project on this site which involves 
rehabilitation of the Emporium Building. Therefore, 
although (a) the Emporium Site Area as a whole is assessed 
for Property Tax purposes at $69,992,515, and (b) two key 
parcels of land, Lots 38 and 43, would be worth $26,000,000 
or more in their own right if unencumbered by the 
requirement to preserve the Emporium Building, the 
preservation of the Emporium Building imposes a significant 
cost constraint on the Developer. 

On completion, the 4.48 acre (or 195,000 square foot) Project 
Site Area would be allocated to the following uses: 

• 182,190 square feet for the complex's "footprint." 

• 12,810 square feet for mid-block rerouting of Jessie Stret 
to Mission Street along both sides of the complex. 

According to DPW, the subject mid-block portion of Jessie 
Street is no longer needed for present or prospective public 
use, with the condition that a public utility easement be 
reserved for Pacific Gas and Electric gas and electric 
facilities and Pacific Bell telecommunications facilities, and 
that Jessie Street be rerouted to either side of the complex. 
To achieve the required street rerouting, the Developer, 
together with Bloomingdale's, Inc. where required (see 
"Ownership" below), would dedicate, construct, and convey to 
the City 12,810 square feet of land to permit the mid-block 
rerouting of Jessie Street to Mission Street along both sides 

Board of Supervisors 
Budget Analyst 

74 






Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

of the Project. (This would involve the demolition of the 
existing buildings on this land.) Of this 12,810 square feet of 
land, the Developer would dedicate, construct, and convey to 
the City approximately 6,405 square feet, or one half, for a 
newly created street, "Jessie Street West", and an additional 
approximately 6,405 square feet, the other half, for a newly 
created street, "Jessie Street East." According to the 
Redevelopment Agency, the new Jessie Streets West and 
East would facilitate efficient and safe traffic circulation for 
vehicles and pedestrians to serve the Project, including a 15- 
bay truck loading and delivery area served from Jessie Street 
West. 

Ownership: Bloomingdale's, Inc., an Ohio corporation, owns most of the 

Project Site Area 5 . Bloomingdale's, Inc. has deemed the 
existing Emporium Building as unsuitable for a new 
Bloomingdale's department store because it does not meet 
modern retail standards. However, Bloomingdale's, Inc. 
considers the costs of building only a new department store 
building to be prohibitive given the requirement to preserve 
the historic features of the Emporium Building. Therefore, 
Bloomingdale's, Inc. wishes to be part of a larger 
development to enhance the patronage to its Bloomingdale's 
department store, while lowering its cost of occupying the 
space. Consequently, Bloomingdale's, Inc. has partnered 
with the Developer to create a mixed use complex. Upon the 
Developer's completion of (a) the shell and core of the 
department store, (b) the hotel pad, and (c) the mixed-use 
portion of the Project, Bloomingdale's, Inc. will convey all of 
the project site property to the Developer in exchange for a 
$30,000,000 shell build-out for, and fee ownership of, its 
Bloomingdale's department store. Effectively, the Developer 
would pay Bloomingdale's, Inc. $30,000,000 for (a) the land, 
and (b) its commitment to operate a Bloomingdale's 
department store as a major attraction for the retail portions 
of the mixed-use complex 6 . 



5 Bloomingdale's, Inc. owns most of the Project Site Area except (a) Assessor's Block 3705, Lot 9, 
which is owned by the Developer, (b) Assessor's Block 3705, Lots 10 and 12, which are under option 
to the Developer, and (c) the subject portion of Jessie Street. 

6 The structure of the proposed transaction is laid out in Recitals H and I of the draft OPA/DDA. 
The Developer anticipates, firstly, acquiring fee title to Lots 10 and 12 and to the subject portion of 
Jessie Street, and then conveying fee title to all of its holdings to Bloomingdale's, Inc. 
Bloomingdale's, Inc. would then ground lease the entire project site to the Developer during the 
Project's construction. Upon completion, Bloomingdale's, Inc. would convey fee title to the project 
site (excluding the department store parcel) to the Developer, thereby terminating the ground lease. 

Board of Supervisors 
Budget Analyst 

75 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

The Developer would be responsible for the costs associated 
with the termination of existing leases for property within 
the project site and any relocation assistance costs associated 
with existing business tenants. Certain existing office and 
retail uses would be provided with relocation benefits to the 
extent they are eligible under the Yerba Buena Center 
Redevelopment Plan or State redevelopment law. They could 
be relocated either within or outside the Project. There are 
no existing residential uses. 

Funding 

Arrangements: Based on a Redevelopment Agency report to the Board of 

Supervisors, the Project would increase the value of the 
Emporium Site Area by $450,000,000", from its current 
assessed valuation (for Property Tax purposes) of 
$69,992,515 to $519,992,515. This projected incremental 
value would be funded by a combination of private 
investment (see "Ownership" above) and Property Tax 
increment funding based on non-housing tax revenues 
generated by the Project, provided by the Redevelopment 
Agency in the maximum amount of $27,000,000 representing 
the net present value 8 of the Property Tax increment funding 
as of the Project's opening (see Comments No. 4 through 10 
below). Based on the projected increased valuation of 
$450,000,000 once the Project has been completed and the 
FY 2000-01 Property Tax rate of $1,136 per $100 of assessed 
valuation, increased Property Tax revenue from the 
completed Project would total $5,112,000 annually. The size 
of the annual Property Tax increment contributions made by 
the Redevelopment Agency (funded by the incremental 
Property Tax revenues being generated as the Project is 
constructed) would be determined on the basis of the 
shortfall between the Developer's actual rate of return on its 
Project development costs and the Developer's preferred 12 
percent rate of return. 



Under a separate agreement, Bloomingdale's, Inc. and the Developer would enter into a Reciprocal 
Easement Agreement which is anticipated to include an operating convenant for Bloomingdale's, Inc. 
to complete the build-out of, open, and operate a Bloomindale's department store. 

7 The amount of $450,000,000 comprises (a) $46,000,000 for the Bloomingdale's department store 
shell, core, and fit-out, (b) $57,000,000 for the hotel, (c) $113,000,000 for 60 interval ownership units, 
and (d) $234,000,000 for other retail, entertainment, and office spaces. 

8 The subject proposal uses a net present value of future dollars based on a 7.5 percent annual 
discount rate. 

Board of Supervisors 

Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



In return for the Redevelopment Agency's Property Tax 
increment contributions, the City would participate in future 
net cash flow, net refinancing proceeds, and net sales 
proceeds from the Project (see Comments No. 11 through 14 
below). 

A 12 percent rate of return has been negotiated as a return 
on cost for the Developer and as a return on the 
Redevelopment Agency's investment of Property Tax 
increment assistance for the City. According to Mr. Warner, 
a 12 percent rate of return on cost for investors is reasonable 
in the current real estate development market. The 
Redevelopment Agency, the Mayor's Office of Economic 
Development, and independent real estate economics 
consultants reviewed mixed-use projects in large 
metropolitan areas and determined a range of returns on 
developers' costs from 10.5 percent to 13 percent, depending 
on the projects' varying components and market risk factors. 
Based on this analysis, a 12 percent annual return based on 
the one-time total cost of the Project was assessed as a 
reasonable rate of return given the risks to the Developer of 
the subject Project. 

According to Mr. Warner, the 12 percent rate of return would 
be a simple, rather than compound, rate of return on the net 
operating income 9 . If the Developer achieved a higher than 
12 percent rate of return on costs, there could be two 
benefits: (a) the Developer could require less Property Tax 
increment contributions from the Redevelopment Agency 
(because such contributions are based on the shortfall 
between the Developer's actual rate of return and its 
preferred 12 percent rate of return), and (b) the City's 
participation in the Project revenues could be accelerated. 
Mr. Warner states that the City's participation would 
similarly be based on a 12 percent (simple interest) rate of 



9 Net operating income is defined as all gross revenues received by the Developer from the Project, 
less (a) operating expenses for each Developer fiscal year, and (b) the amount of the Capital 
Expenditures Reserve for each Developer fiscal year. It excludes any development cost item and 
there is no deduction for debt service. According to Mr. Smith and Mr. Warner, debt service is not 
deducted from gross revenues for the purpose of determining the net operating income and, 
therefore, the risk for debt service is solely carried by the Developer, to the City's benefit in the 
payment of participation. 

Board of Supervisors 
Budget Analyst 

77 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

return on tbe Redevelopment Agency's investment in the 
Project. 

Project Approvals: The required Project approvals fall into the following four 
categories: 

(1) Entitlements : these include (a) adopting related CEQA 
findings, mitigation measures, statement of overriding 
considerations, and mitigation monitoring program (File 
00-1265 which will also be considered at the 
Transportation and Land Use Committee's August 22, 
2000 meeting), (b) amending the Yerba Buena Center 
Redevelopment Plan (File 00-1257 which has been 
referred directly to the Board of Supervisors for a public 
hearing on August 28, 2000), (c) amending the City's 
General Plan and Zoning Map so that they are 
congruent with the Yerba Buena Center Redevelopment 
Plan Amendment (Files 00-1256 and 00-1258 to be 
considered at the Transportation and Land Use 
Committee's August 22, 2000 meeting), and (d) 
approving Jessie Street and Mission Street sidewalk 
widths, and parking and traffic regulations (Files 00- 
1259, 00-1311, and 00-1434 to be considered at the 
Transportation and Land Use Committee's August 22, 
2000 meeting). 

(2) Agreements for Development of the Project: these 
include approving (a) the OPA/DDA between the 
Redevelopment Agency and the Developer, and (b) an 
Owner Participation Agreement between the 
Redevelopment Agency and the Developer. According to 
Mr. Smith, neither the OPA/DDA, nor the Owner 
Participation Agreement between the Redevelopment 
Agency and Bloomingdale's, Inc. (which has yet to be 
finalized) require Board of Supervisors approval. 
However, Redevelopment Agency approval of these 
agreements is conditional upon the Board of Supervisors 
adopting the Yerba Buena Center Redevelopment Plan 
Amendment. 

(3) Financing: this includes the subject resolution 
approving the use of Property Tax increment under a 
Tax Allocation Agreement between the City and the 
Redevelopment Agency and a Financing Agreement 
between the City, the Redevelopment Agency, and the 
Developer. 

Board of Supervisors 
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78 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

(4) Site Assembly: this includes approving (a) the vacation 
of a portion of Jessie Street (having adopted the 
Resolution of Intent under File 99-2235, the Board of 
Supervisors has scheduled a public hearing for August 
28, 2000), and (b) a Sale and Exchange Agreement for 
the conveyance by the City of the vacated street area 
and the conveyance by the Developer of areas for the 
rerouting of Jessie Street (File 00-1266 to be considered 
at the Transportation and Land Use Committee's 
August 22, 2000 meeting). 

Comments: Yerba Buena Center Redevelopment Plan 

1. According to Mr. William Carney of the Redevelopment 
Agency, the Redevelopment Agency is seeking to make the 
Project an approximately 6.77 acre extension to the existing 
87 acre Yerba Buena Center Redevelopment Project Area. 
The purpose of the Yerba Buena Center Redevelopment Plan 
is to revitalize a substantial portion of the South of Market 
Area by creating a mixed-use civic center with cultural 
institutions, hotels, retail locations, affordable housing, and 
the Moscone Convention Center. The Project is deemed to be 
an appropriate extension of the Yerba Buena Center 
Redevelopment Area because it provides a major retail, 
entertainment, and hotel center in close proximity to the 
Yerba Buena Gardens and Moscone Convention Center, and 
enhances the pedestrian and public transit connections 
between those locations and Market Street. 

2. Adding the Project to the Yerba Buena Center 
Redevelopment Project Area would provide the 
Redevelopment Agency with the necessary legal and 
financial ability to contribute Property Tax increment 
funding to the Project in order to alleviate the economic and 
physical blight of the Emporium Site Area, according to Mr. 
Carney. Furthermore, the proposed Yerba Buena Center 
Redevelopment Plan Amendment would modify some of the 
building height and size constraints of the City's Planning 
Code. Attachment IV is a memorandum provided by Mr. 
Carney which specifies the Planning Code modifications in 
the proposed Amendment. The proposal to amend the Yerba 
Buena Center Redevelopment Plan is subject to pending 
legislation which, in accordance with the requirements of 
State redevelopment law, has been sent directly to the Board 

Board of Supervisors 
Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

of Supervisors for consideration after a public hearing (File 
00-1257 to be heard by the full Board of Supervisors on 
August 28, 2000). 

3. According to File 00-1256 (an ordinance amending the 
San Francisco General Plan to be considered at the 
Transportation and Land Use Committee's August 22, 2000 
meeting), any property to be included in the Emporium Site 
Area would be necessary for the effective redevelopment of 
that area, and would not be included purely for the purpose 
of enlarging the area eligible for obtaining Property Tax 
increment contributions from the Redevelopment Agency, 
and thereby increasing such contributions. 

Property Tax Increment Contribution 

4. According to Keyser Marston Associates, Inc. and the 
Sedway Group, despite the currently strong San Francisco 
real estate market, none of the six development plans 
proposed for the Emporium Site Area would be economically 
feasible without a public subsidy because of what they term 
the "extraordinary costs" associated with retaining and 
restoring several historic portions of the Emporium Building, 
site assembly, relocation of utilities, and construction of new 
streets. (Attachment V, provided by Mr. Carney, 
summarizes the six alternative scenarios.) For a developer to 
achieve an annual 12 percent rate of return on the cost of 
developing the Emporium Site Area, both real estate 
economics consultants have identified a "feasibility gap" of 
$32,800,000, a funding shortfall which they believe would 
require public funding. The amount of $32,800,000 
represents (a) approximately 7.3 percent of the total Project's 
incremental value of $450,000,000, or (b) approximately 10.9 
percent of the Developer's capped development costs of 
$300,000,000 10 . However, according to Mr. Smith and Mr. 



10 Capped development costs are defined as the lesser of (a) actual development costs, or (b) 
$300,000,000 less a maximum of $15,000,000 for the gross sales proceeds from the hotel parcel 
(minus reasonable closing costs, brokerage fees, and prepayment penalties) if the hotel parcel is sold 
before the end of the development costs determination period (which is upon the earlier of either 95 
percent occupancy or the end of the third year after opening). The $300,000,000 maximum capped 
development cost does not include the Bloomingdale's department store build-out and the 
construction of the hotel above the pad, and it could be decreased if the overall scope of the Project is 
reduced. According to Mr. Smith, capping development costs protects the City against cost overruns 
delaying the commencement of the City's participation term. It also limits the total amount of 
interest on the Developer's equity during construction which counts towards development costs. 

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Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Warner, $32,500,000 represents a much more significant gap 
in relation to the Developer's projected cash equity in the 
Project of approximately $55,000,000. 

5. In response to the identified "feasibility gap" of 
$32,800,000, the Redevelopment Agency proposes to 
contribute Property Tax increment funds up to the amount of 
$27,000,000 (in net present value as of the date the Project 
opens) to reimburse the Developer for expenditures to 
alleviate blight and provide public benefits such as: 

(1) The historic preservation costs associated with the 
Project. These are estimated to cost $21,333,000 u . 
Attachment VI provided by Mr. Carney, summarizes the 
estimated historic preservation costs. 

(2) Site assembly and preparation (which includes 
$3,100,000 to purchase the subject portion of Jessie 
Street). 

(3) Transit and circulation improvements. 

(4) Economic revitalization and job creation. 

According to Mr. Smith and Mr. Warner, although these 
types of eligible expenditures for which Property Tax 
increment must be allocated are specified in the Project 
documents (for example, the OPA/DDA), the exact cost items 
on which the $27,000,000 Property Tax increment funding 
would be expended have not yet been determined. They note, 
however, that the Developer would be required to report on 
what eligible costs it expends for the Property Tax increment 
contributions it receives. 

6. The $27,000,000 Property Tax increment contribution 
(net present value at the Project's opening) is a figure which 
results from negotiations between the City and the Developer 
over the value of the entire feasibility gap. The $5,800,000 
gap (approximately 1.9 percent of the Developer's capped 
development costs of $300,000,000) between the 



Lowering development costs could benefit the City in two possible ways: (1) it could accelerate 

reaching the financial benchmark for the early cessation of Property Tax increment, and (2) it could 

accelerate reaching the financial benchmark for the early commencement of participation in Project 

revenues. 

11 According to the Sedway Group, the cost and construction risk of retaining these historic elements 

and selectively demolishing the rest of the structure is much greater than demolishing the entire 

building and building on a clear site. 

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Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Redevelopment Agency's maximum Property Tax increment 
contribution of $27,000,000 (9 percent of capped development 
costs) and the estimated $32,800,000 "feasibility gap" 
(approximately 10.9 percent of capped development costs) 
would be closed by the Developer through one or more of the 
following mechanisms: reducing project costs through value 
engineering, increasing rental revenues, finding other 
funding sources, or by accepting a lower rate of return. 
While the $27,000,000 Property Tax increment contribution 
is only 9 percent of the total capped development costs of 
$300,000,000, it represents a more significant contribution to 
Project development costs given that the Developer is 
expected to contribute equity in the amount of $55,000,000 
up-front. 

7. The Redevelopment Agency justifies the proposed 
Property Tax increment contribution of $27,000,000 in net 
present value as of the date the Project opens, or 6 percent of 
the Project's projected increased value of $450,000,000, on 
the grounds that the Project would generate the following 
public benefits: 

• The Project would revitalize the area of mid-Market and 
Mission Streets. 

• The Project would retain, restore, or adaptively reuse 
significant historic features of the Emporium Building. 

• The Project would create an estimated 2,300 direct 
permanent, full time equivalent jobs 12 and an estimated 
1,100 construction jobs during the construction period 13 . 
The Developer would commit to targets for (a) the 
employment of economically disadvantaged individuals, 
South of Market Area residents, and San Francisco 
residents, and (b) tenant leases with minority and 
women-owned businesses. 

• The Developer would pay $800,000 into the City's First 
Source Hiring Program 14 . The Developer and other 



12 Calculated by Keyser Marston Associates, for the City and the Redevelopment Agency. 

13 Also calculated by Keyser Marston Associates, which estimates that, in addition to direct jobs, the 
Project would generate in San Francisco an approximate 4,400 indirect permanent jobs, and 1,200 
indirect construction jobs, as a result of the Project's economic "spin-off." 

14 The City's First Source Hiring Program is a job training and job referral program for economically 
disadvantaged San Francisco residents seeking entry-level jobs. In terms of the subject Project, it is 
anticipated that the Redevelopment Agency would administer the program for construction jobs, 
while the City would administer the program for permanent jobs. The Developer would designate 

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Budget Analyst 

82 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



employers involved in the Project would be required to 
adhere to the City's First Source Hiring Ordinance and 
hire qualified economically disadvantaged individuals 
into entry level jobs. 

The Developer would pay $250,000 for special 
improvements to, or the operation of, HaUidie Plaza 15 . 
The Developer would pay $1,500,000 for parking 
improvements in the South of Market Area or other 
parking solutions determined by the City (this 
expenditure would be separate from the parking 
expenditures described above which relate to the 
construction of residential condominium units). 
The Developer would implement a number of measures to 
encourage the use of public transportation by employees 
and customers. 

The Developer would spend at least $1,000,000 on Powell 
Street MUNI and BART station improvements, and at 
least $250,000 on off-site mitigation measures identified 
in the Environmental Impact Report for the Project. 
The Project would generate a projected $14,000,000 per 
year in new tax revenues for the City from the third year 
after the complex's opening (beginning in Year 2006) 16 . 
The Project would contribute at least $16,000,000 in 
today's dollars to affordable housing over 30 years, which 
doubles the affordable housing fee which would otherwise 
be payable under the Planning Code. This would be paid 
on the basis of 20 percent of the Property Tax increment 
for the first 16 years from the effective date of the Board 
of Supervisors ordinance approving the Yerba Buena 
Center Redevelopment Plan Amendment (File 00-1257) 
and 40 percent for years 17 to 30. The Project would also 
contribute a child care fee of $1 per square foot of new 
hotel and office space, for an estimated total contribution 
of $398,000. According to the Planning Department, 
additional fees would also be payable for open space (an 



and fund a liaison person to work with the Redevelopment Agency and the City to implement the 
First Source Hiring Program within the Project, in part by informing tenants of their obligation to 
advise the City about available entry-level jobs. 

15 Thio amount is approximately the same as would be payable if the Project site street frontages 
were part of the Union Square Business Improvement District. 

16 Keyser Marston Associates estimates $6,000,000 per year to the General Fund and $8,000,000 per 
year to other City funds (dedicated MUNI and DPW revenues, hotel tax funds, and child care fees). 
These estimates consist of total projected tax revenues (including all Property Tax increment) less 
the City's projected costs of providing additional services. 

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Budget Analyst 

83 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



estimated $66,000) and for transit impact (an estimated 
$115,000). 
• An annual S200,000 payment would be made to the City 
(indexed for inflation through annual adjustments based 
on changes in the Consumer Price Index) for the first 15 
years of the Project, or a one-time in-lieu payment of 
$2,250,000, if the Developer allocates hotel rooms as 
interval ownership units. These payments are a 
negotiated amount which would be in lieu of possible lost 
Hotel Tax revenues should such hotel units be converted 
to interval ownership units. 

8. The Redevelopment Agency's Property Tax increment 
contribution would not exceed a cap of $27,000,000 in net 
present value as of the date of the Project's opening and 
would not continue beyond the earlier of (a) 13 years after 
the Project opens, (b) 16 years after the effective date of the 
ordinance adopting the Yerba Buena Center Redevelopment 
Plan Amendment (File 00-1257) 17 , or (c) the year in which 
the Developer receives net proceeds from refinancing or sale 
in an amount equal to, or greater than, actual development 
costs less $25,000,000 18 . 

In any year, the Redevelopment Agency's annual maximum 
Property Tax increment contribution to the Developer would 
not exceed 60 percent of the total Property Tax increment 
revenues generated within the Emporium Site Area that 
year. The Redevelopment Agency would pay the Property 
Tax increment contributions to the Developer on a "pay-as- 
you-go" basis, once annually, from the first year in which 
construction of the Project produces incremental assessed 
value 19 . No Property Tax increment revenues would be 



17 According to Mr. Smith, the 16 year period caps the risk to the Redevelopment Agency of a longer 
than anticipated construction period. This is subject to a possible maximum three year extension if 
there is major damage to the Project (outside the Developer's control) which reduces the annual net 
available Property Tax increment to the Redevelopment Agency by 10 percent or more. 

18 According to Mr. Warner, $25,000,000 is the amount of equity investment the Developer must 
retain in the Project while the Redevelopment Agency is contributing Property Tax increment. Once 
City participation begins, the Developer is no longer required to retain equity investment in the 
Project. 

19 The Agency, subject to Board of Supervisors approval, would have the option to issue Tax 
Allocation Bonds and pay the Developer the Increment Liquidation Amount in lieu of pay-as-you-go 
increments, if that would be financially advantageous for the Redevelopment Agency. The 
Increment Liquidation Amount would be (a) the amount of any prepayment penalty, plus 97 percent 
of the difference between (a) $27,000,000 plus 7.5 percent annual interest, and (b) the Property Tax 

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Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

available beyond the Property Tax increment generated by 
the Project itself. The Redevelopment Agency's annual 
Property Tax increment contribution could equal the total 
increment collected on the assessed value of taxable Project 
property, less: 

• The affordable housing set-aside. 

• An approximately 20 percent statutory pass-through 
required under redevelopment law for payments to 
funding agencies (including the City, the San Francisco 
Unified School District, and BART). 

• Up to 2 percent annual growth in the Property Tax base 
to adjust for inflation. 

• An annual fee to the Redevelopment Agency of $65,000 
for the first three years in which the Developer receives 
Property Tax increment, then $50,000 annually for the 
next four years, and then $35,000 annually until the end 
of the Property Tax increment contribution period (all 
amounts indexed for up to 3 percent annual inflation). 
These payments are intended to compensate the 
Redevelopment Agency for the costs of overseeing the 
Project. 

9. According to the estimates prepared by the Sedway Group 
for six alternative development scenarios for the Emporium 
Site Area (as described in Attachment V), this preferred 
development plan requires the least public subsidy and 
provides the most public benefits. However, the other five 
alternative scenarios would preserve more of the historic 
Emporium Building and would conform more closely with 
existing Planning Code requirements. Mr. Tony Irons, the 
City Architect, has reviewed the construction cost estimates 

increment and interest contributed thus far. However, according to Mr. Smith, pay-as-you-go 
Property Tax increment contributions are preferable to tax allocation bonds. Tax allocation bonds 
are based on projected tax increment payments and are, therefore, at risk of reassessment or 
decreased tax revenues due to damage to the Project, and place more risk directly on the Developer 
(although pay-as-you-go makes it more difficult for the Developer to finance those proceeds). 
Conversely, the size of pay-as-you-go Property Tax increment contributions is determined by the 
Property Tax increment actually generated. Furthermore, tax allocation bonds would be more 
expensive because (a) the Yerba Buena Center Redevelopment Area has a shorter term which ceases 
between 2008 and 2010, thereby reducing the length of time available to amortize the bonds in the 
absence of a term extension or credit enhancement, (b) the Redevelopment Agency would have to pay 
transaction costs associated with issuing the bonds, and (c) the City and the Redevelopment Agency 
would need to safeguard against potential default on the bonds (such as obtaining a guarantee for 
shortfalls in tax increment funds to pay debt service costs). 

Board of Supervisors 
Budget Analyst 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



10. No documentation provided to the Budget Analyst 
provides a comprehensive economic analysis of the costs to 
Bloomingdale's, Inc. of not developing the Project Site Area 
in terms of (a) all the operating costs associated with owning 
currently vacant or underutilized commercial properties in 
the Project Site Area 20 , and (b) the projected loss to 
Bloomingdale's, Inc. resulting from no development of the 
Project Site Area. The Budget Analyst has not been able to 
verify what Bloomingdale's, Inc. would do with the valuable, 
centrally located Project Site Area if the proposed Project did 
not proceed. Due to the lack of this information, the Budget 
Analyst is unable to determine the extent to which the 
feasibility of developing the Project Site Area depends on 
Redevelopment Agency contributions of $27,000,000 of 
Property Tax increment to the Developer. 

City Participation in Project Revenues 

11. Under the proposed Project, in return for the City's 
Property Tax increment contribution, the City would 
participate in net cash flow, net refinancing proceeds, and 
net sales proceeds from the Project. The participation 
revenues, which would all go to the City's General Fund 21 , 
would be generated on the following basis: 

• City participation in net cash flow is 35 percent of net 
operating income after the Developer recovers (a) for any 
participation payable in years 1 to 19 after the Project's 
opening, its 12 percent annual return on capped 
development costs plus accumulated net operating income 
shortfalls (and 12 percent interest on such shortfalls), and 
(b) for any participation payable in years 19 onwards, its 
annual 12 percent simple interest return on capped 
development costs. 

• City participation in refinancings would be 35 percent of 
the Developer's net proceeds from a refinancing. 



20 As one example, based on the most recent assessed valuation for Property Tax purposes of the 
Project Site Area properties held by Bloomingdale's, Inc. (approximately $63,600,000), 
Bloomingdale's, Inc. would be liable for Property Tax payments of approximately $722,496 per year 
(at the FY 2000-01 rate of $1,136 per $100 of assessed valuation). 

21 Under the Tax Allocation Agreement, the Redevelopment Agency irrevocably assigns participation 
payments to the City. 

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Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



• City participation in sales would be 35 percent of the net 
proceeds from a sale. 

Selling the hotel parcel would represent one-time 
participation for the City if it happens after the end of the 
development costs determination period. If it occurs before 
the end of that period, it would reduce the development costs 
but there would be no participation in the sale of the hotel 
parcel. According to Mr. Warner, if the hotel pad is sold for 
up to $15,000,000, both the Developer's actual development 
costs 22 and the capped development costs would be reduced 
accordingly to the benefit of both the Developer (in terms of 
overall Project financing) and the City (due to the potential 
increased likelihood that the Developer would reach the 
financial benchmark for the early cut-off of Property Tax 
increment). If the hotel parcel sale's proceeds exceed 
$15,000,000, those proceeds above $15,000,000 reduce only 
the Developer's actual development costs, not the capped 
development costs because of a negotiated $15,000,000 cap 
for hotel parcel sales proceeds. However, the City again 
benefits in that reduced actual development costs accelerate 
the City's participation in Project revenues. 

12. The City's participation would begin on the earliest of: 

• The year in which both (a) the Project's net operating 
income, exclusive of the City's Property Tax increment 
contribution, is equal to or greater than an annual 12 
percent return on capped development costs, and (b) the 
balance of accumulated net operating income shortfalls 
(and annual 12 percent interest on such shortfalls) is zero. 

• The year in which the Developer receives net sale 
proceeds less $25,000,000. 

• The 18 th anniversary date of the Project opening 
(projected to be approximately 2021 based on a Project 
opening of 2003). 



22 Actual development costs are defined as (a) the Developer's expenditures on development of the 
Project, and (b) 12 percent interest on the Developer's equity during the construction period. 
Development costs would be reduced by (a) the amount of Property Tax increment rebated to the 
Developer during construction, (b) any Project revenues received by the Developer during 
construction, and (c) the total net proceeds from a sale of the hotel parcel if it is sold before the end of 
the development costs determination period. 

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Budget Analyst 

87 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Subject to ongoing negotiations with labor union 
representatives, the Developer could be obligated to prepay 
$1,000,000 of the City's participation revenue in accordance 
with provisions relating to Bloomingdale's department store 
labor relations. According to Mr. Smith, such prepayment 
would be applied to the last participation dollars otherwise 
payable to the City. 

13. The City's participation would be (a) capped at the total 
amount of Propeiiy Tax increment it had contributed, plus 
12 percent simple interest on that total contribution, and (b) 
limited to a maximum term of 99 years. The Developer 
would have the right to buy out or prepay some or all of the 
City's participation at any time. Mr. Smith notes that the 
99-year maximum term would cover a number of economic 
cycles, thereby protecting the City's participation against 
short-term economic downturns. Projections, however, 
estimate that full repayment of the City's Property Tax 
increment investment plus required interest would take 33 
years. According to Mr. Smith, the City's participation rights 
are associated with the mixed-use portion of the Project, and 
would continue even if some or all of the mixed-use portion of 
the Project was sold or transferred to other owners. 

14. Projections prepared by the Sedway Group for the 
Developer, and reviewed by Keyser Marston Associates on 
behalf of the City and the Redevelopment Agency, indicate 
that the City would be able to recoup fully its investment of 
Property Tax increment, plus an annual 12 percent simple 
interest return on its total investment, from the Project's 
cash flow and net refinancing proceeds. The City is 
estimated to receive (a) all of the principal amount of its 
Property Tax increment contribution (which would have been 
up to $27,000,000 in net present value as of the Project's 
opening) back from Project revenues within the first 24 years 
after the Project opens, and (b) the annual 12 percent simple 
interest return on its total Property Tax increment 
contribution between years 25 and 33 after the Project opens. 

Attachment VII is a spreadsheet prepared by the Sedway 
Group summarizing the chronological breakdown of: 

• The Redevelopment Agency's estimated cumulative 
Property Tax increment contributions in the amount of 

Board of Supervisors 
Budget Analyst 

88 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



S40.747,639 between Years 1 and 12, which has a net 
present value of $27,000,000 using an annual discount 
rate of 7.5 percent, discounted to the Project's opening. 

• The City's subsequent participation in net revenue in the 
amount of $42,741,661 between Years 19 and 24 
(assuming a sale or refinancing in the amount of 
$17,060,937 in Year 23) by which time the City is 
scheduled to be repaid an amount equivalent to the 
Redevelopment Agency's Property Tax increment 
contribution of $27,000,000 (net present value as of the 
Project's opening). 

• The City's subsequent participation in net revenue in the 
amounts of $76,578,791 between Years 25 and 33 by 
which time the City is scheduled to be paid a 12 percent 
simple interest return on the Redevelopment Agency's 
total Property Tax increment contribution of $27,000,000 
(net present value as of the Project's opening). 

Based on the assumed net revenue to be derived from the 
Project, and the projected 7.5 percent discount rate, the 
participation outlined in Attachment VII equates to 
$27,000,000, plus 12 percent simple interest. According to 
Mr. Smith, the Sedway Group projections were reviewed and 
determined to be reasonable and accurate by Keyser Marston 
Associates, on behalf of the City and the Redevelopment 
Agency. 

Key Risks to the City 

15. According to Mr. Smith, the key risks to the City of 
proceeding with the proposed Project would be: 

• The proposed construction is either not completed or not 
opened, and therefore blight in the Emporium Site Area is 
not alleviated and the public benefits from the Project 
(including jobs and tax revenues) are not realized. 

• The subject portion of Jessie Street is vacated and 
conveyed to the Developer but the complex is not built. 

• The Redevelopment Agency's contribution of $27,000,000 
in Property Tax increment is more than the Project 
requires to be economically feasible due to, for example, 
better than expected Project revenues, lower than 
expected development costs, or higher than expected 
refinancing or sale proceeds. 

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Budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



• Post-completion market conditions prevent the projected 
revenues to both the Developer and the City from being 
generated, thereby providing the City with neither the 
projected return on the Redevelopment Agency's 
investment of Property Tax increment, nor the projected 
public benefits (such as tax revenues, jobs, and economic 
revitalization). 

• The hotel is not built thereby reducing the number of jobs, 
the revenue, and the tax increment generated by the 
Project. 

• There is a disaster due to earthquake, fire, or some other 
catastrophic event which diminishes or delays the City's 
participation in Project revenues. 

With regard to the proposed Project not proceeding, Mr. 
Smith states that the key risks to the City would be that 
Bloomingdale's, Inc. keeps the Emporium Building vacant, 
that no development occurs, and that, therefore, the City 
does not receive the public benefits which would accrue from 
the proposed Project (as outlined in Comment No. 7 above). 

16. Mr. Smith advises that the proposed development 
contains the following provisions which would mitigate these 
risks: 

• There is the inherent financial risk to the Developer (and 
its parent company, Forest City Enterprises, Inc.), 
Bloomingdale's, Inc., and the construction lender of not 
completing the Pi-oject because the Developer, 
Bloomingdale's, Inc., and the construction lender would be 
committing significantly more private dollars than the 
Redevelopment Agency would be contributing to the 
Developer in Property Tax increment. 

• The subject portion of Jessie Street could not be conveyed, 
and escrow could not close, until the Developer has 
finalized its project financing, obtained the required 
permits, and met a number of other conditions to closing 
under the OPA/DDA 23 . 



23 According to Mr. Smith, the vacation of the subject portion of Jessie Street would not become 
effective until the Yerba Buena Center Redevelopment Plan Amendment and the General Plan 
Amendment ordinances take effect, and the Developer (together with Bloomingdale's, Inc. where 
required) has: (a) irrevocably dedicated the property for Jessie Streets West and East to the City; (b) 
agreed to construct the new Jessie Streets West and East, including required public utilities, 
pursuant to a street improvement agreement and permit; (c) furnished bonds or other security 

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Budget Analyst 

90 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Even if the subject portion of Jessie Street was conveyed 
but the complex was not built, the City would have 
received the $3,100,000 payment (the November of 1999 
assessed value of the property) and bonds or other 
security procured by the Developer to finance completion 
of the new Jessie Streets West and East, and an 
irrevocable offer to dedicate and convey fee title for the 
new street areas to the City. 

The City would have contributed only a projected 
$1,977,027 in Property Tax increment by the end of the 
28 month construction period (based on a fully completed 
Project). The City could seek to have the Redevelopment 
Agency require repayment under any new or amended 
Owner Participation Agreement for which new 
consideration is required if alternative development 
proposals were to be constructed instead. 
The following provisions in the Financing Agreement 
would mitigate against the risk of the Redevelopment 
Agency contributing more Property Tax increment than 
the Project needs to be economically feasible: (a) Property 
Tax increment contributions could only commence after 
construction actually begins, (b) Property Tax increment 
contributions could be terminated early based on better 
than expected performance against refinancing proceeds 
or net sale proceeds benchmarks, and (c) the City's 
participation in Project revenues could begin early if the 
Project meets cash flow or net sale proceeds benchmarks 
earlier than expected. 



acceptable to the City to guarantee completion of the new street areas; and (d) ensured that the City 
has interim easements to maintain access to public utilities located in the subject portion of Jessie 
Street, and pedestrian and vehicular access to adjacent properties until Jessie Streets West and East 
are constructed. 

The City proposes to sell and convey the subject portion of Jessie Street to the Redevelopment 
Agency for immediate sale and reconveyancing to the Developer. In turn, the Developer would (a) 
pay $3,100,000 directly to the City through escrow, and (b) dedicate, construct, and convey fee title to 
the City for Jessie Streets West and East. Therefore, according to Mr. Smith, the sale and 
conveyancing process is being held in two stages through a "simultaneous" escrow which ensures 
that the property is not conveyed to the Developer until all of the conditions for the commencement 
of the Project are satisfied. Mr. Smith states that this allows the Redevelopment Agency to serve as 
a clearinghouse for all of the closing conditions and helps protect the City's interest by ensuring that 
conveyance does not occur until the Developer is ready to begin construction. Neither the City nor 
the Redevelopment Agency would pay the transfer taxes and closing costs associated with the 
conveyance. 

board of supervisors 

Budget Analyst 

91 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



If construction takes longer than 28 months (subject to 
force majeure 24 ), the Redevelopment Agency could require 
specific performance measures, as permitted under the 
OPA/DDA. 

In the event of a disaster, the Developer would be obliged 
to restore up to the extent of insurance coverage 25 . 
The maximum 99-year participation term would give the 
City time to fully recover its Property Tax increment 
contributions, plus annual 12 percent simple interest, 
even if there was damage to the complex or a market 
downturn. 

The parent company, Forest City Enterprises, Inc., would 
provide the City with a completion guarantee so that it 
would complete the construction of the complex if the 
Developer fails to do so, subject to Forest City 
Enterprises, Inc. being able to obtain the necessary 
financing. If Forest City Enterprises, Inc., despite using 
its best efforts, cannot obtain financing, it could terminate 
its obligations to complete so long as it pays back the 
Property Tax contribution it has received from the 
Redevelopment Agency, the annual 12 percent simple 
interest on the total contribution, plus a termination fee 
of $1,000,000 if the Project is less than 50 percent 
completed. According to Mr. Smith, this guarantee is a 
condition of the close of escrow under the OPA/DDA. 
The Developer has a financial incentive to have the hotel 
built (as outlined in "Description of the Project" above). 
A Financing Agreement covenant obligates the Developer 
to use commercially reasonable efforts to enforce 
operating covenants for the hotel and the Bloomingdale's 
department store. If the Developer breaches this 
covenant, and the number of full-time equivalent jobs fall 
below levels specified in the Financing Agreement, the 
Redevelopment Agency would have the right to reduce its 
Property Tax increment contributions, or, if the Property 
Tax increment contribution term has ended, the City 



24 An unexpected event outside of a party's control which delays that party's ability to perform under 
a contract. 

25 According to Mr. Smith, the Redevelopment Agency's Risk Manager has approved the Developer's 
required insurance coverage. After Project completion, the Redevelopment Agency would review the 
Developer's insurance coverage every five years to check that the Developer's insurance coverage is 
commercially prudent (subject to the limitations specified in Section 7.3 of the Financing 
Agreement). 

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budget Analyst 

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Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

would have the right to accelerate the payment of 
participation. 

Related City and Redevelopment Agency Costs 

17. The City estimates its total costs of managing this 
proposed Project to be as follows: 

• Total expenses of up to approximately $350,000 to be 
incurred by the City Attorney's Office in relation to the 
transaction documents. These expenses would be 
reimbursed by the Developer. 

• Total expenses of approximately $350,000 expected to be 
incurred by the Redevelopment Agency for outside 
counsel. These expenses could be covered by the existing 
Verba Buena Center Redevelopment Area budget, 
according to Mr. Carney. 

• Annual expenses incurred by the Redevelopment Agency 
for the costs of monitoring the Project. These expenses 
would be reimbursed by the Developer in the amount of 
$65,000 for each of the first three years in which the 
Developer receives Property Tax increment, then $50,000 
for each of the next four years, and then $35,000 annually 
until the end of the Property Tax increment contribution 
period (all amounts indexed for up to 3 percent annual 
inflation). 

• Total expenses of approximately $15,000 incurred by the 
Real Estate Division of the Department of Administrative 
Services in processing the sale of the subject portion of 
Jessie Street. These costs would be reimbursed by the 
$3,100,000 Jessie Street sale proceeds. 

Summary: Emporium Development L.L.C. has proposed redeveloping 

the site of the former Emporium Building and adjacent 
warehouses and office buildings as a 1,607,000 gross square 
foot multi-story complex comprising retail, entertainment, 
restaurant, cinema, office, and hotel complex. Construction 
is scheduled to take 28 months, and would involve restoring 
historically significant portions of the former Emporium 
Building and constructing underground links to the Powell 
Street MUNI and BART station. The Project is projected to 
increase the value of the site by $450,000,000, from its 
current assessed valuation (for Property Tax purposes) of 
$69,992,515 to $519,992,515. This projected incremental 

Board of Supervisors 
Budget Analyst 
93 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



value would be funded by a combination of private 
investment and Redevelopment Agency Property Tax 
increment contributions. 

According to independent real estate economics consultants, 
despite the currently strong San Francisco real estate 
market, none of the six development plans proposed for the 
Emporium Site Area would be economically feasible without 
a public subsidy because of what they term the 
"extraordinary costs" associated with retaining and restoring 
the Emporium Building, site assembly, relocation of utilities, 
and construction of new streets. For a developer to achieve 
an annual 12 percent rate of return on the cost of this 
Project, the real estate economics consultants have identified 
a "feasibility gap" of $32,800,000, a funding shortfall which 
they believe would require public funding. 

In response to this identified "feasibility gap", the 
Redevelopment Agency proposes to contribute Property Tax 
increment funds up to the amount of $27,000,000 (in net 
present value as of the date the Project opens) to reimburse 
the Developer for expenditures which alleviate blight and 
provide public benefits such as historic preservation costs, 
site assembly and preparation, transit and circulation 
improvements, and economic revitalization and job creation. 
The amount of $27,000,000 was determined through 
negotiations between the City, the Redevelopment Agency, 
and the Developer. 

No documentation provided to the Budget Analyst provides a 
comprehensive economic analysis of the costs to 
Bloommgdale's, Inc. of not developing the Project Site Area 
in terms of (a) all the operating costs associated with owning 
currently vacant or underutilized commercial properties in 
the Project Site Area, and (b) the projected loss to 
Bloommgdale's, Inc. resulting from no development of the 
Project Site Area. The Budget Analyst has not been able to 
verify what Bloomingdale's, Inc. would do with the valuable, 
centrally located Project Site Area if the proposed Project did 
not proceed. Due to the lack of this information, the Budget 
Analyst is unable to determine the extent to which the 
feasibility of developing the Project Site Area depends on 
Redevelopment Agency contributions of $27,000,000 of 
Property Tax increment to the Developer. 

Board of Supervisors 
Budget Analyst 

94 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Projections indicate that the City would be able to recoup 
fulby its investment of Property Tax increment, plus an 
annual 12 percent simple interest return on its total 
investment, from the Project's cash flow and net refinancing 
proceeds. The City is estimated to receive (a) all of the 
principal amount of its Property Tax increment contribution 
(which would have been up to $27,000,000 in net present 
value as of the Project's opening) back from Project revenues 
within the first 24 years after the Project opens, and (b) the 
annual 12 percent simple interest return on its total 
Property Tax increment contribution between years 25 and 
33 after the Project opens. 

The key risks to the City of proceeding with the proposed 
Project would be: 

• The proposed construction is either not completed or not 
opened. 

• The subject portion of Jessie Street is vacated and 
conveyed to the Developer but the complex is not built. 

• The Redevelopment Agency's contribution of $27,000,000 
in Property Tax increment is more than the Project 
requires to be economically feasible. 

• Post-completion market conditions prevent the projected 
revenues to both the Developer and the City from being 
generated. 

• The hotel is not built. 

• There is some catastrophic event which diminishes or 
delays the City's participation in Project revenues. 

The proposed Project contains a number of risk mitigation 
provisions, which are described in Comment No. 16 above. 

The City estimates its total costs of managing this proposed 
Project to be as follows: 

• Up to $350,000 to be incurred by the City Attorney's 
Office in relation to the transaction documents (to be 
reimbursed by the Developer). 

• Approximately $350,000 expected to be incurred by the 
Redevelopment Agency for outside counsel (to be covered 
by the existing Yerba Buena Center Redevelopment Area 
budget). 

Board of Supervisors 
Budget Analyst 

95 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

• Annual expenses incurred by the Redevelopment Agency 
for the costs of monitoring the Project (to be reimbursed 
by the Developer). 

• Approximately $15,000 incurred by the Real Estate 
Division of the Department of Administrative Services (to 
be reimbursed by the $3,100,000 Jessie Street sale 
proceeds). 

Recommendation: Approval of the proposed resolutions is a policy matter for 
the Board of Supervisors. 



Board of Supervisors 
Budget analyst 

96 



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EXISTING PROJECT BOUNDARY 
PROPOSED ADDED AREA 



NOTE Trie Amended Area consists ot the Existing Protect Area 
and me Proposed Added Area 



YERBA BUENA CENTER REDEVELOPMENT PROJECT AREA EXPANSION I 
FIGURE 1-2: EXISTING REDEVELOPMENT PROJECT AND THE PROPOSED ADDED AREA I 



AUG. 17.2000 12:02PM S F R A 

San Francisco 

Redevelopment Agency 

770 SoMen Gate Aw™ 
San Francto. CA 94102 



415.74S.2400 
TTY 415.743.2500 




Attachment iv 
Page 1 ot 2 



WILJjEi.4fi0WN,Jfi.,MayO' 

Miit Ou-iloc. Pistde* 

for or. fi:Twc. Via Ptejlfcrt 

lirayKrtj 

Kilwyn C. Pilarxflen 

DjjS r, Slnjt 

:.K!i :«S. 

BemrYYte 

Jimis B. uaw, aucjiivo Oireaoi 



August 17,2000 



Harvey M. Rose 

Board of Supervisors Budget Analyst 

City Hall 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102 

Dear Mr. Rose, 

The proposed Yerba Buena Plan Amendment modifies the existing Yerba Buena Redevelopment 
Plan by expanding the Project Area boundaries to include the adjacent Emporium Site Area; 
making a major department store and mixed-use retail, entertainment, office and hotel 
development on the Emporium Site .Area an objective of the Redevelopment Plan; providing for 
tax-increment financing up to $27 million (in net present value at the date of opening) to be 
derived only from the Emporium Site Area if needed to make the proposed development 
feasible; and incorporating significant portions of the Planning Code as the Development 
Standards for the Emporium Site Area, with modifications necessary to accommodate the 
proposed redevelopment of the area. 

To accomplish the proposed redevelopment, the Plan Amendment modifies the Planning Code 
requirements that would otherwise apply for the Emporium Site Area in the following ways: 

Use 

■ Allows hotel and office as permitted uses (instead of conditional uses). 

■ Provides for ''interval hotel suites" and for their conversion to residential use (subject to 
parking, open space and affordable housing requirements similar to those in the Code). 

These uses could be granted under the current Code, and the Plan Amendment process 
provides a greater degree of public review than does the conditional use process. 

Density, height and bulk 

■ Provides a base Floor Area Ratio (FAR) of 9: 1 with no additional increase for Transferable 
Development Rights (TDRs) (current base is 6:1, increasing to 9:1 with TDRs). 

■ Increases height and bulk limits to 135-X, 200-X and 400-X (from 120-X, 160-X and 160-F). 

The FAR change provides for the amount of development necessary to make the 
redevelopment of the site economically feasible, within the maximum development envelop 
allowable on the site under the current Code. The height changes allow for adjustments to 



100 



r- r- o c Attach ment '-Y_ 

AUG. 17.2000 12--03PM SFRft Page 2 ot ~2 



accommodate the relocation of the Emporium Building dome and to create a more slender 
and graceful hotel tower compatible with the adjacent towers of the Yerba Buena Center. 

Historic preservation 

■ Provides for a specific program for retaining, restoring, rehabilitating, and adaptively reusing 
the historically significant features of the Emporium Building, in lieu of Article 11. 

In finding the proposed Plan Amendment consistent with the General Plan, the Planning 
Department has determined that the Emporium Building has no substantial remaining value 
and therefore could be subject to demolition. However, the Plan Amendment specifically 
provides for retaining the historically significant features of the building, including the 
Market Street facade, the historic office portion of the building, and the dome and rotunda. 

Other provisions 

■ Reduces off-street freight and bus loading requirements in accordance with the demand 
analyses in the Project EIR. 

■ Allows minor shadowing of Hallidie Plaza in light of the limited nature of shadowing 
established in the Project EIR. 

■ Allows minor exceedances of wind comfort standards in light of the limited nature of wind 
impacts as described in the Project EIR. 

■ Retains Article 6 regarding signs, but allows certain exceptions based on compelling design or 
architectural justification. 

The first three items could be granted as exemptions wider the current Code, and the Plan 
Amendment process provides the same level of analysis by the Planning Department and a 
greater degree of public review than does the exemption process. The sign item provides the 
Planning Department and the Agency with the discretion to provide higher signs and greater 
projections for awning signs based on compelling design or architectural justification. 

Since the Plan Amendment provides that the Planning Code acts as the basic development 
controls in the Emporium Site Area, design review and approval of the project will be conducted 
by the Planning Department, in accordance with a Delegation Agreement with the 
Redevelopment Agency, The Delegation Agreement is intended to assure that the Planning 
Code, as modified, is applied to the Emporium Site Area in a manner consistent with other areas 
in the City. 

Please call me at 749-2412 should you have any further questions. 

Sincerely, 

William Carney 
Senior Project Manager 
Yerba Buena Center 



101 



RUG. 17.2000 12:03PM 

San Francisco 
Redevglopmenl Agency 

770 Golden Gate Avenue 
San fonclsco. CA 94102 



415.743 2400 

HY 415.749.2500 



SFRfl 




ACiacnren 1 - ' 
Page 1 ot I 



WIDE L 6R0WN, JR., Mayor 

Mart Dunlop. Pras.Mni 

Ra.non Rmimc, Vice Pruideni 

Utcy King 

Kalliryn C, fv.siMM'm 

Daiittan Singit 

lynsus S*csl 

taVtyY.Yea 

Jincs a. Mmiw, EiKLlivt o:redor 



August 17,2000 



Harvey M. Rose 

Board of Supervisors Budget Analyst 

City Hall 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102 

Dear Mr. Rose, 

In response to the request from your office, the following provides descriptions of the six 
redevelopment alternatives analyzed for the proposed Emporium Site Area. Economic analysis 
conducted by Sedway Group and confirmed by Keyser Marston Asociates determined that all the 
alternatives, except the preferred alternative, were infeasible without substantially greater financial 
assistance. 

• Preferred Alternative - The Preferred Alternative includes new retail, entertainment, 
restaurant, cinema, office and hotel uses, The Project would retain, rehabilitate, and restore 
the Market Street facade (to a depth of 65 feet) and the existing dome and rotunda of the 
Emporium Building. The project would demolish and replace other existing buildings 
between Market and Mission streets, would relocate existing office uses within the new 
building, and would require the City to vacate a portion of Jessie Street. The Preferred 
Alternative includes 277,500 square feet of gross leasable area (GLA) of retail space, 
97,000 square feet (GLA) of entertainment space, 225,000 square feet (GLA) of office 
space, a 355,500 square foot (GLA) Bloomingdale's department store, and a 375,000 
square foot 210-roora hotel and 60-unit interval vacation ownership component 

• EIR Alternative C - This alternative preserves the exterior and interior of the Emporium 
Building and the Annex Building including the Jessie Street facades. Jessie Street becomes 
a glass-enclosed "gallery" with bridges connecting the development on either side. 
Development on the south side is limited to a four-story base and seven-story tower. This 
alternative includes 255,500 square feet (GLA) of retail space, 164,700 square feet (GLA) 
of office space, and a 357,000 square foot (GLA) Bloomingdale's department store. 

• EIR Alternative D - This alternative also preserves most of the Emporium Building, but 
would allow selective demolition of the Jessie Street facade, as well as demolition of the 
Annex Building. Some floors of the new addition would span Jessie Street. Development 
south of Jessie Street would also be limited to a four-story base and seven-story tower, 
although somewhat bulkier than under Alternative C. This alternative includes 186,800 



102 



~™- e c a Ci Attachm ent n 

AUG. 17.2000 12=03rf1 S F R A Page 1 of 1 ' 



square feet (GLA) of retail space, £0,000 square feet (GLA) of entertainment space, 

1 13,300 square feet (GLA) of office space, a 401,500 square foot (GLA) Bloomingdale's 

department store, and a 196-roorn, 174,000 square foot hotel. 

• EIR Alternative E - This alternative, also known as the Existing Planning Controls 
Alternative, preserves the Emporium and Annex buildings, but maximizes the development, 
to the extent permitted under existing planning controls, in the area south of Jessie Street, 
This alternative includes 272,300 square feet (GLA) of retail space, 39,100 square feet 
(GLA) of entertainment space, 257,200 square feet (GLA) of office space, and a 360,200 
square foot (GLA) Bloomingdale's department store. 

• Historic Preservation Alternative (Retail) - This alternative encompasses only the historic 
Emporium retail store, which would be historically renovated for primarily retail, with 
some office space. 

• Historic Preservation Alternative (Office) - This alternative encompasses only the historic 
Emporium retail store, which would be historically renovated for prima ri ly office, with 
some retail space on the first two floors. 

Please call me at 749-2412 should you have any further questions. 

Sincerely, 



William Carney, 
Senior Project Manager 
Yerba Buena Center 



103 



Attflc 1 - 



c-rient VI 



EXHIBIT 1 

SUMMARY OF HISTORIC RETENTION 

AND 

RESTORATION COSTS 

(Based on Swinerton & Walberg 3/16/00 Cost Estimates) 



Dome and Rotunda Restoration S4.036 

Market Street Facade 1 ,920 

Historic Building Retention .8.02] 

Subtotal - Hard Costs per Swinerton Estimates 1 3,977 

Construction Contingency @ 10% 1.398 

Subtotal 15,375 

Indirect Costs @ 19.5% X 

Total Development Cost Before Financing 

Financing Costs @ 19.2% 2 

Total Development Cost 




1 Percentage rate estimated to include architectural, engineering, legal, insurance, taxes, public 
permits and fees, development management fees, and EIEL Actual architectural and engineering 
costs will likely be disproportionately high for historic work. 

2 Average rate per project pro forma ( 33,2TO /j73^oo). As many of the historic preservation costs 
will occur, early on, the actual carrying costs will probably be higher. 

oaoao.001. cwo.. 



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108 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Item 15 - File 00- 1385 



Department: 



Item: 



Department of Public Health (DPH), 
General Hospital (SFGH) 



San Francisco 



Resolution concurring with the Controller's Certification 
that laundry services can continue to be performed for the 
Department of Public Health, San Francisco General 
Hospital by a private contractor for a lower cost than 
similar work performed by City and County employees. 



Services to be 
Performed: 



Description: 



Laundry Processing Services at San Francisco General 
Hospital 

Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for 
laundry processing services at San Francisco General 
Hospital for FY 2000-01 would result in the estimated 
savings as follows: 





Lowest 


Highest 




Salary 


Salary 


Citv Operated Service Costs 


Step 
$470,528 


Step 


Salaries 


$545,904 


Fringe Benefits 


151,908 


163,757 


Operating Expenses 


101,289 


101,289 


Capital Costs 


206.530 


206.530 


Total 


$930,255 


$1,017,480 


Contractual Services Costs 1 


830.256 
$99,999 


831.081 


Estimated Savings 


$186,399 



1 Contractual Service Costs include high and low estimates of contract monitoring expenses by DPH 
staff, according to Mr. Joe Matrenga of the Controller's Office. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

109 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Comments: 



Recommendations: 



1. Laundry services for San Francisco General Hospital 
were first certified as required under Proposition J 
(Charter Section 10.104) in 1994 and since then, they 
have been continuously provided by outside contractors. 
The current contractor, Tartan Textiles Services, Inc. has 
provided laundry services for San Francisco General 
Hospital since September 1, 1997. 

2. The proposed resolution should be amended to 
retroactively approve the Controller's Certification as of 
July 1, 2000. 

3. The FY 1999-2000 one-year contract with Tartan 
Textile Services, Inc. expired on June 30, 2000. Services 
are currently provided to SFGH by Tartan Textile 
Services on a month-to-month contract extension. Mr. 
Reed Kennedy of the Purchaser's Office states that Tartan 
Textile Services will continue to provide laundry service 
under the contact extension for approximately 4 to 6 
months, after which time a new one-year contract will be 
issued through a competitive selection process. 

4. The laundry processing service costs for FY 2000-2001 
is $0,303 per pound, which is $0,028 more per pound than 
the FY 1997-1998, 1998-1999, and 1999-2000 rates of 
$0,275. DPH estimates the total annual weight of the 
laundry it processes to be approximately 2,555,000 
pounds, which is less than one percent different than the 
2,538,113 pounds of laundry actually processed in FY 
1999-2000. The Contractual Services Costs used by the 
Controller are based on the pounds of laundry and $0,303 
per pound for processing services and related DPH staff 
contract monitoring costs, ranging from $56,091 to 
$56,916 annually. 

5. The Controller's supplemental questionnaire with the 
Department's responses is shown in the Attachment to 
this report. 

1. In accordance with Comment No. 2, amend the 
proposed resolution to provide for retroactivity. 

2. Approve the proposed resolution, as amended. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

110 



Attachment 



CHARTER 8.300-1 (PROPOSITION J) QUESTIONNAIRE: 

Department: Department of Public Health, San Francisco General Hospital Medical Center 

Contract Services: Laundry Services 

For term starting approximately: July I, 2000 through June 30, 2003 

Who performed services prior to contracting out? Civil Service employees. The level of staffing at 

SFGH was reduced to 12 employees as a result of contracting out in July, 1994. Since one (1) 2780 

Laundry Supervisor had resigned from his position at SFGH the number was reduced to 1 1 employees as 

the new level of staffing at SFGH Originally, the laundry services were performed by 34 Civil Service 

employees: 1 FTE 2786 General Services Manager, 2 FTE 2780 Laundry Supervisors, 1 FTE 2772 Sewing 

Technician, 11 FTE 2770 Sr. Laundry Workers, and 19 FTE Laundry Workers. One of the 2760 Laundry 

Workers, however, retired and was never replaced; one 2780 Laundry Supervisor resigned from his 

position at SFGH 

The revised level of staffing reflects efficiencies in the laundry operations if new equipment is installed (the 

old equipment was removed from the premises to allow seismic retrofit), and comprises 21employees. This 

staffing consists of 1 FTE 2786 General Services Manager, 1 FTE 1426 Sr. Clerk Typist, 1 FTE 2772 

Sewing Technician, 7 FTE 2770 Sr. Laundry Workers, and 1 1 2760 FTE 2760 Laundry Workers. 

Number of City employees laid off as a result of contracting out? A total of 19 laundry workers were 

laid off from laundry worker positions and placed in #99 10 positions within the Department of Public 

Health (2-2770 Sr. Laundry Workers and 17- 2760 Laundry Workers). No one was separated from City 

and County service. 

Explain disposition of employee if they were not laid off. The following 11 classifications remained at 

SFGH to manage the linen distribution system: 1 FTE 2786 General Services Manager, 1 FTE 2772 

Sewing Technician, 6 FTE 2770 Sr. Laundry Workers, and 3 FTE 2760 Laundry Workers. These work 

assignments were not affected by the proposed Prop J contract The other 23 employees were either 

reassigned to Laguna Honda Hospital, placed in 99 10 positions within the DPH, resigned, retired or took 

voluntary leave to accept another position. 

19 employees were assigned to duties in 9910 positions as follows: #2760: 1 assigned to SFGH 

Environmental Services as a Porter, 1 assigned to AssL Storekeeper duties in SFGH Pharmacy, 1 assigned 

to clerical duties in the Mental Health Rehab Facility, 1 assigned to Buildings and Grounds as a Porter, 1 

assigned to Human Resources as a personnel clerk (resigned 7/8/94 to accept a position in the US Postal 

Service), 4 assigned to train as security guards in Institutional Police Department, 1 assigned to AIDS 

office, 4 assigned to Laguna Honda laundry, and 1 assigned to Laguna Honda Environmental Services. Of 

the 2770 classification: 1 was assigned to SFGH Messenger Services, and 1 assigned to Laguna Honda 

Laundry. 

In addition, 3 employees voluntarily took a leave to accept 9910 positions: 1- 2770 Sr. Laundry Worker and 

1- 2760. Laundry Worker were trained in SFGH Institutional Police; 1- 2760 Laundry Worker was trained 

in SFGH Radiology Department to perform clerical duties. 

What percent of a City employee's time is spent on services to be contracted out? Approximately 2% 

or less of an Assistant Hospital Administrator's (classification 2143) time would be spent on administering 

this contract. 

How long have the services been contracted out? 6 years (since July 1,1994). 

How long will contract services meet the goals of your MBE/WBE Action Plan? Contractor will be 

selected through a competitive bid process. All interested MBE/WBE/LBE will be notified and will be 

encouraged to bid. 

Angela Carmen, Assistant Administrator 
Facilities/Materials Management 
Department Representative 

206-5088 



111 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Item 16 -File 00-1348 



Department: 
Item: 



Service to be 
Performed: 



Municipal Transportation Agency (Muni) 

Resolution concurring with the Controller's certification 
that paratransit services for the Public Transportation 
Commission can continue to be practically performed by a 
private contractor at a lower cost than by City and County 
employees. 

Paratransit Services 



Description: 



Paratransit Services provide door-to-door transportation 
services for persons with disabilities. This is 

accomplished through four modes of transportation, 
including taxis, ramp taxis, lift vans, and group vans, 
which cover a service area with geographic boundaries of 
the City and County of San Francisco, small portions of 
northern San Mateo County (those areas within % mile of 
Muni and Bay Area Rapid Transit (BART) routes that run 
from San Francisco to the Daly City BART station) and 
Treasure Island. Paratransit Services are intended to 
provide a service area identical to that of Muni. 

Intelitran, a private contractor, has provided Paratransit 
Services to Muni since April 1, 2000 (see Comment No. 2). 

City Charter Section 10.104.15 provides that the City may 
contract with private firms for services if the Controller 
certifies, and the Board of Supervisors concurs, that such 
services can, in fact, be performed by private firms at a 
lower cost than similar work or services performed by 
City employees. 

The Controller has determined that contracting for 
Paratransit Services for FY 2000-01 would result in 
estimated savings as follows: 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

112 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Lowest Highest 

Salary Salary 

City Operating Service Costs Step Step 

Salaries $9,025,939 $11,677,674 

Fringe Benefits 3,168,661 3,585,514 
Capital and Operating 

Expenses 3.184.568 3.184.568 

Total $15,379,168 $18,447,756 

Contractual Service Cost 14.991.885 14.993.529 

Estimated Savings $387,283 $ 3,454,227 

Comments: 1. Paratransit Services were first certified, as required by 

Charter Section 10.104, in 1984 and have been provided 
by an outside contractor since that time. 

2. Ms. Annette Williams of Muni reports that Paratransit 
Services were previously provided by Cerenio 
Management Group. Since April 1, 2000, the current 
contractor, Intelitran, has been providing Paratransit 
Services. The Muni selected Intelitran for a five-year 
contract through a competitive selection process, 
previously approved by the Board of Supervisors (File No. 
00-0045). 

3. According to Ms. Williams, the FY 2000-01 contract for 
provision of Paratransit Services of $14,991,885 is 
$1,335,218 or 9.8 percent more than the FY 1999-2000 
contract of $13,656,667 1 . Ms. Williams states that the 
increase in contract costs is primarily due to increased 
demand for Paratransit Services. Additionally, wages for 
bus drivers were increased from $9.42 to $10.42 per hour. 

4. The five-year contract with Intehtran is not to exceed 
$66,420,375 (File No. 00-0045). However, based on the 
projected FY 2000-2001 Intelitran contracted services 
amount of $14,991,885, the five-year Intehtran contract is 



1 According to Ms. Williams, the FY 1999-2000 contract period was covered by two separate 
contracts, one with Cerenio Management Group from July 1, 1999 through May 31, 2000, the other, 
with Intehtran from April 1, 2000 through June 30, 2000. The amount of the FY 1999-2000 contract 
provided by the Department is an aggregation of these two contracts. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

113 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

projected to total at least approximately $74.9, or 
approximately $8.5 million more than the maximum 
allowed. According to Ms. Williams, if demand for 
Paratransit Services continues such that it appears that 
the five-year contract maximum of $66,420,375 will be 
exceeded, Muni would seek approval from the Board of 
Supervisors for a contract modification. 

5. The contract with Intelitran provides that the 
administrative costs incurred by Intelitran for FY 2000-01 
should not exceed $2,138,661. The amount budgeted for 
such FY 2000-01 administrative costs is $2,029,225 or 
$109,436 less than the stipulated contract amount. 

6. The Contractual Services Cost used for the purpose of 
this analysis is based on Muni's actual budgeted 
expenditures for this service in FY 2000-01. 

7. The Controller's supplemental questionnaire with the 
Public Transportation Commission's responses is shown 
in the Attachment to this report. 

8. As the contract period for the proposed resolution is 
July 1, 2000 to June 30, 2001, the proposed resolution 
should be amended to provide for retroactivity. 

Recommendations: 1. Amend the proposed resolution to provide for 
retroactivity (see Comment No. 8). 

2. Approve of the proposed resolution, as amended. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

114 



Attachment 
CHARTER 10.104.15 (PROPOSmON J) QUESTIONNAIRE 

DEPARTMENT Municipal Transportation Agency 

CONTRACT SERVICES: Paratransit 

CONTRACT PERIOD: 07/01/00-06/30/01 

(1) Who perfonned the activity/service prior to contracting out? 

Service has always been contracted out. 

(2) How many City employees were laid off as a result of contracting out? 

None. 

(3) Explain the disposition of employees if they were not laid off. 

N/A 

(4) What percentage of City employees' time is spent of services to be contracted out? 

20% of one full-time equivalent contract administrator 
plus 3 hours per month of a 1630 Accountant. 

(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing 
request for contracting out? 

Twenty (20) years. Likely to be an ongoing 
request for contracting out. 

(S) What was the first fiscal year for a Proposition J certification? Has it been certified for each 

subsequent year? FY 83-84. Yes, it has been certified every year, 
except FY 99-00 when the contract was in transition and the 
year was divided between 2 contractors, CMG & Intelitran. 

(7) How will the services meet the goals of your MBEAVBE Action Plan? 

40% of all service is to be provided by MBE/WBE firms. 

(8) Does the proposed contract require that the contractor provide health insurance for its employees? 
Even if not required, are health benefits provided? 

Yes, the contract requires health insurance for employees. 

(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same 
benefits provided to employees with domestic partners? If not, how does the proposed contractor 
comply with the Domestic Partners ordinance? 

Yes, the contractor provides benefits to employees with 

spouses and domestic partners. 

Department Representative: Annette Williams 

Telephone Number 923-6142 



115 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



Item 17 - File 00-1427 
Department: 

Item: 



Amount: 
Source of Funds: 

Budget: 



Fire Department 

Department of Public Works (DPW) 

Hearing to consider the release of reserved funds in 
the amount of $21,026 to fund emergency repairs of 
the Auxiliary Water Supply System (AWSS) facilities 
located at Cargo and Amador Streets, in the Bayview 
Hunters Point area. 

$21,026 

Fire Protection Systems Improvement General 
Obhgation (GO) Bonds, previously appropriated and 
placed on reserve by the Board of Supervisors 

The summary budget for the $21,026 in reserved 
funds is as follows: 



Emergency Repair of AWSS at 
Cargo and Amador Streets 




Construction 
(performed by A. Ruiz Construction & Associates, 
see Comment No. 2 below) 

Construction Management & Inspection 
(performed by DPW) 

Project Management 
(performed by DPW) 


$18,774 

1,846 
406 


Total Cost 


$21,026 



Description: 



Attachment I to this report, provided by the 
Department of Public Works (DPW), contains details 
to support the summary budget above. 

The subject $21,026 in reserved funds would be used 
to fund repairs already completed on the Auxiliary 
Water Supply System (AWSS) at Cargo and Amador 
Streets in the Bayview Hunters Point area. The 
AWSS is a system of reservoirs, cisterns, pipelines, 
pump stations, and fireboats, comprising the source of 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

116 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

water supply for fire protection in emergency 
situations. 

The City sold a total of $46.2 million in Fire 
Protection Systems Improvement General Obligation 
Bonds ($31 miUion in 1987 and $15.2 million in 1991) 
to finance improvements to the City's Auxiliary Water 
Supply System. In March of 1996, the Board of 
Supervisors approved a supplemental appropriation 
ordinance for $3,907,900 (File 101-95-61) from 
accrued interest from the Fire Protection Systems 
Improvement Bonds for four categories of capital 
improvement projects: (1) repair and improvement of 
the Fireboat Phoenix, (2) implementation of motorized 
AWSS control valves, (3) repairs to the AWSS water 
storage tank, and (4) emergency repairs of AWSS 
facilities. The Board of Supervisors placed $3,269,850 
of the total appropriation of $3,907,900 on reserve. To 
date, a total of $1,057,258 of the $3,269,850 has been 
released, including $429,408 for emergency repairs to 
AWSS facilities (see Comment No. 3 below). The 
subject requested release of reserved funds would 
come from category (4) emergency repairs of AWSS 
facilities. 

Comments: 1. According to Mr. Patrick Rivera of the Department 

of Public Works (DPW), a leak was discovered in the 
AWSS pipeline at Cargo and Amador Streets on April 
10, 2000. Under the direction of DPW, A. Ruiz 
Construction Company & Associates (see Comment 
No. 2 below) exposed the pipe, repaired the leak, and 
restored the roadway pavement. Mr. Rivera reports 
that the repairs were completed on June 19, 2000. 

2. Mr. Rivera advises that A. Ruiz Construction 
Company & Associates maintained an on-going 
contract with DPW for street paving repairs and 
emergency underground repairs, which began on July 
1, 1999 and terminated on June 30, 2000, after the 
subject repairs were completed. According to Mr. 
Rivera, DPW selects firms for as-needed construction 
work, including the contract with A. Ruiz 
Construction Company & Associates, through an 
annual competitive bidding process. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

117 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 



3. According to Mr. Rivera, when the Board of 
Supervisors placed the subject $3,269,850 on reserve 
in 1996, $627,000 of such reserved funds were 
designated for emergency repair of AWSS facilities. 
As shown in Attachment II, provided by DPW, since 
1996, the Finance and Labor Committee has released 
a total of $429,408 of the $627,000 in reserved funds 
for emergency repairs, leaving a remaining balance of 
$197,592. If the Finance and Labor Committee 
approves the proposed release of $21,026 in reserved 
funds, the remaining balance of reseiwed funds for 
emergency repairs would be $176,566 ($197,592 less 
$21,026). 

Recommendations: Approved the proposed release of reserved funds. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

118 



Attachment I 



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120 



Memo to Finance and Labor Committee 

August 23, 2000 Finance and Labor Committee Meeting 

Item 18 - File 00-0931 



Note: This item was heard, and recommended for approval, by the Housing and 
Social Policy Committee at its meeting of July 18, 2000. The proposed 
resolution has been transferred to the Finance and Labor Committee for 
fiscal impact consideration. 



Department: 



Item: 



Location: 



Seller: 



Recreation and Park Department (RPD) 
Department of Real Estate (DRE) 

Resolution approving and authorizing acquisition of real 
property located in the Forest Hills area identified as 
Assessor's Block No. 2923, Lot No. 67 for $206,000 from 
the Florence G. Alberts and Burton H. Alberts Living 
Trust for Open Space purposes, and adopting findings 
pursuant to City Planning Code Section 101.1. 

Assessor's Block No. 2923, Lot No. 67 
70 Edgehill Way 

The Florence G. Alberts and Burton H. Alberts Living 
Trust 



Size: 

Purchase Price: 

Source of Funds: 
Description: 



11,651 square feet 

$200,000, or $17.17 per square foot, plus $6,000 in closing 
costs (see Comment No. 2). 

Open Space Funds approved in the FY 1999-2000 budget. 

Approval of the subject resolution would authorize the 
acquisition of the subject property, Block 2923, Lot 67 
from the Florence G. Alberts and Burton H. Alberts 
Living Trust for $206,000. The lot would be used for 
Open Space purposes. The lot is located at 70 Edgehill 
Way. 

The subject property is adjacent to the existing Edgehill 
Mountain Open Space property in the Forest Hills area. 
It is located west of Twin Peaks on the west slope of 
Edgehill Mountain, north of Portola Drive. It extends 
from Kensington Street to the Edgehill Auto Pathway as 
marked on the Attachment (provided by DRE). The 
acquisition of the subject property would effectively 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

121 



nc^u, iuiiuib o<in rrancsca rarx zra upen ov*>-= riu i; , °" 



Attachment 



Casa No. S7.118M 

Proposed Amendment af Map 4 ot the Recreation and Open Space Element 

of the General Plan 




Proposal to designzte site zs 
"Prooosad Public Ooen Spaca" 



Existing P.ec. Parx 
Department Pane/ fzciirf/ 



Ecgeniil Mountain Open 
Spaca Extension 
A3 2S23. lot 67; A3 2934, 
lots 10, "11, 12, 12. 21 



3 '.'.<3 : :r.:c tMcsr. <C ;ar>cr-2r --L3 rz -t - 



r'isnninc Zezzr.rr.er,: Pecc.-ts 



124 




City and County of£an Francisco 
Meeting Minutes 



[All Committees] 

Government Document Section 

Main Library 



finance and Labor Committee 

Members: Supenisors Leland Yee, Sue Bierman, Tom Ammiano 
Clerk: Mary Red 



v4iu/-*osy 



Monday, August 28, 2000 



10:00 AM 

Special Meeting 



City Hall, Room 263 



Members Present: Leland Y. Yee, Sue Bierman, Tom Ammiano. 



MEETING CONVENED 

The meeting convened at 10:00 a.m. 

001362 [Outreach newspaper] 

Supervisors Leno, Bierman 

Resolution designating the San Francisco Bay Times and the San Francisco Spectrum for outreach advertising 
services for the City and County of San Francisco for the lesbian/gay msexuaL transgender community for 
outreach advertising for FY2000-2001. 

7/24/00, REFERRED FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA AT THE NEXT BOARD MEETING. 
7/31/00, SEVERED FROM FOR ADOPTION WITHOUT COMMITTEE REFERENCE AGENDA. Supervisor Yee requested this matter 
be severed so it could be considered separately. 

7/31/00, REFERRED to Finance and Labor Committee Supervisor Yee requested this matter be referred to committee. 
7/31/00, SUBSTITUTED Supervisor Leno submitted a substitute resolution bearing new title 
7/31/00, ASSIGNED to Finance and Labor Committee 

8/23/00, AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. Heard in Committee Speakers: Harvey Rose, 
Budget Analyst; Mike Ward, Assistant Director, Purchasing; Supervisor Leno; Supervisor Ammiano; Kim Corsaro, Editor, S. F. Bay 
Times; Supervisor Yee; Ted Lakey, Deputy City Attorney. Amendment of the Whole to include the San Francisco Spectrum as outreach 
advertising service. 

8/23/00, CONTINUED. Continued to special meeting on August 28, 2000, to go to Board as Committee Report on August 28 
Heard in Committee. Speakers: Han j ey Rose, Budget Analyst; Mike Ward, Assistant Director, Purchasing 
Department. 

RECOMMENDED AS COMMITTEE REPORT by the following vote: 
Ayes: 3 - Yee, Bierman, Ammiano 



ADJOURNMENT 



The meeting adjourned at 10:06 a.m. 



DOCUMENTS DEPT, 
AUG 3 J 2000 

SAN FRANCISCO 
p UBLIC LIBRARY 



City and County of San Francisco 



Primed at 9:25 \M 



F 

^ 0.254 

3 

1*1 ) CO 



CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt.DOC. Section 



OFSai\ rKANCISCO 
/ 



^BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



August 24, 2000 



TO: ^Finance and Labor Committee 

FROM: ^Budget Analyst 



DOCUMENTS DEPT. 

AUG 2 9 2000 

SAN FRANCISCO 
PUBLIC LIBRARY 



SUBJECT: Special August 28, 2000 Finance and Labor Committee Meeting 
Item 1- File 00-1362 



Note: This item was continued by the Finance and Labor Committee at its 

meeting of August 23, 2000. The subject resolution has been amended 
to add the San Francisco Spectrum newspaper as a second outreach 
advertising newspaper for the Lesbian, Gay, . Bisexual, and 
Transgender community in FY 2000-01. 

Item: Resolution designating the San Francisco Bay Times and 

the San Francisco Spectrum newspapers for outreach 
advertising services for the City and County of San 
Francisco for the Lesbian, Gay, Bisexual, and 
Transgender Community for FY 2000-01. 

Comment: Mr. Mike Ward of the Purchasing Department advises 

that he will respond directly to the questions raised by the 
Finance and Labor Committee at its August 23, 2000 
meeting regarding two issues: (a) union membership of 
the two newspapers' staff, and (b) the payment of a living 
wage to the two newspapers' staff. Attached are written 
responses from the San Francisco Bay Times (Attachment 
I) and the San Francisco Spectrum (Attachment II) 
regarding these two issues. 



Memo to Finance and Labor Committee 

August 28, 2000 Finance and Labor Committee Meeting 



Recommendation: Approval of the prop*' ition ifi a policy matter for the 

Board of Supervisor! 




larvey M. Rose 



Supervisor Yee 
Supervisor Bierman 
President Ammiano 
Clerk of the Board 
Controller 
Steve Kawa 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Wm SAN FRANCISCO M V Attachment : 

Bay Times 



August 23, 2000 



Mr. Luis Espinoza 
Purchasing Department 
City Hall, Room 430 
1 Dr. Carlton Goodlet Place 
San Francisco, CA 94102-4685 



Re: Contract #95304 

Outreach Advertising for fiscal year July 1, 200-June 30, 2001 



Dear Mr. Espinoza: 

Regarding the concerns raised in this morning's Finance Committee meeting, I would like to addre ;s the 
following issues. 

The question was asked whether San Francisco Bay Times pays our staff in accordance with the M .nimum 
Wage Law. In fact, we far exceed those provisions. We have two people on staff, in addition to my self. 
They arc paid, respectively, $17.50 and hour and S23.00 an hour. The S23.00 an hour position is a jase- 
plus-commission pay structure, and may in fact be substantially higher than that by the end of the ; ear. The 
$17.50 an hour employee is contracted to receive a raise to $20 an hour on September 1, 2000. Sta f has 
complete benefits: full medical, with domestic partners benefits available, plus a generous assortm :nt of 
other benefits. 

We have three regular independent contractors we work with as well. They are paid $ 1 3 to $25 an nour, 
depending on their duties. 

When I contract with individuals for short-term temporary assignments, I pay $15-$20 an hour. 

Our freelance contributors are paid $75-$250 per article, averaging about $125. The usual rate for 
community newspapers (3nd this is without known exception ir. San Francisco) is S20-S25 per art sie. 

Our newspaper is currently printed in San Jose. This is an economic and practical consideration. 1 here are 
only two printers in San Francisco at this time that are even large enough to accommodate the Ba\ Times, 
and they do not have scheduling availability for us. We are in every other way a San Francisco pu )lication. 
We are not unionized. 

Please let me know if you need any further information. 
Sincerely, 



Kim Corsaro 
Publi»her/Ediior 



wiuimi / laiTo* 



3-10-lffTWSTBeBT. SAN FRANCSCO.C* 9*110 3 41S - 6 26 . 02=0 / FAX 41S „ , 



08/24/00 THU 13:21 FAX 1 115 554 6717 
Aug-23-OO 03:05P Spectrum & sunrise 



Attachment II 




iPECTRUM 



To Whom It May Concorn 

Re: Application As Vendor To The City 



At Spectrum we do not have any employees on payroll. All the design and typeset is 
performed by owners, consequently we pay no salaries or wages. All of our writers ar i 
paid as outside contractors and each is an individual. 

Our subcontractor for printing is Grant Printing / Independent Newspaper, which is 
owned by the Fang Family of San Francisco. I have been told, by the plant manager, 
that Grant is non union but pays wages comparable to Union scale. 

Sincerely, 



Gary Nathan 

Publisher, Executive Editor 



1845 Market Street • San Francisco, California 94103-1112 
Tel: 415-431-1981 • Fax: 415-252-0724 • email: sales@sfspeclrum.6 g 

08/23/00 WED 16:3.1 [TI/RX NO 63 1]